The aim is to stimulate the housing market, which has long been a drag on jobs growth and the wider economy. In a statement, the Fed said it stood ready to take further action if the situation deteriorated further.
On top of the new scheme, the Fed said it would continue its action to bring down long-term interest rates, dubbed "Operation Twist", through to the end of this year. Together the schemes will pump $85bn a month into the US economy.
"If the outlook for the labour market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," said the Fed.
Bernanke said there were signs of recovery in the housing market and in the wider economy, but the Fed clearly feels the economy is not yet strong enough to go it alone. His move is likely to draw fire from Republican critics so close to the election.
The open-ended nature of the mortgage bond-buying scheme – a marked break from other QE programmes – is likely to infuriate critics who already argue that Bernanke is too interventionist.
The statement came after clear signals from Bernanke that he was preparing to act. The economy was "far from satisfactory" and the continuing high rate of unemployment threatened to "wreak structural damage," Bernanke said in a speech at the high-powered annual economic summit of the Federal Reserve Bank of Kansas City last month.
Since that speech, the economic situation appears to have deteriorated. In August, the US added just 61,000 new jobs, half what many economists had been expecting. The unemployment rate ticked down from 8.3% to 8.1% but was driven down not by hiring but by 368,000 Americans leaving the labour force.
Worrying economic news has continued to emerge since the job's report. On Thursday more evidence of a weakening global economy emerged as the Organisation for Economic Co-operation and Development issued its latest report. The OECD found indications of slower growth in the US, Japan, China, India and Russia among others.
Bernanke's actions are likely to spark a furious backlash from some members of the Republican party, who have criticised his past interventions. The Fed chairman has become a whipping boy for the right and Paul Ryan, Mitt Romney's vice-presidential choice, has clearly stated that he is against more stimulus.
"I'm not a fan of more stimulus or more easing," Ryan said last month in a CNBC interview. "The benefits are clearly outweighed by the long-term costs of this. It's not working, and all this loose money from the Fed is basically bailing out the fact that President Obama has failed on fiscal policy."
All but one of the Fed's committee, Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, voted for the new stimulus package.
The Federal Reserve has carried out two rounds of quantitative easing, the first in 2008 and the second in 2010. It has bought up more than $2tn (£1.2tn) of assets, including Treasury bonds and mortgage-backed securities, using electronically created money, in an attempt to boost demand in the flagging US economy. On Thursday, it announced a third burst of bond-buying, worth $40bn a month, for as long as it takes for the American jobs market to improve.
Fed chief Ben Bernanke will continue Operation Twist, whereby the Fed sells short-term bonds and uses the proceeds to buy long-term assets, pushing down long-term borrowing costs. The Fed also slashed interest rates to record lows in the financial crisis of 2008-09 and has kept them there. The Fed statement said it expected rates to stay at their current level of zero to 0.25% until at least mid-2015 – a year longer than it had previously signalled.
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