WASHINGTON, DC-Worried that the economic recovery has stalled,the Federal Reserve Bank will be stepping up its investment ingovernment debt. The decision was made during a one-day meeting,held on Tuesday, in which Fed officials came to the conclusion thatthe recovery is weaker than it had anticipated during its lastmeeting in June. It will use the interest it is earning fromexpiring mortgage-backed securities to buy Treasuries that arematuring in the next two to 10 years.

Last year and in the beginning of 2010, the Federal Reservebrought considerable firepower to the market, buying $1.25 trillionin mortgage securities, $175 billion in mortgage debt from the GSEsand $300 billion in government debt.

Treasury prices, not surprisingly, rallied after the FederalReserve made its announcement--particularly those withfive-to-seven-year maturity dates. The tactic is also expected toput some downward pressure on mortgage and corporate debtrates.