The financial markets applauded the U.S. Federal Reserve Bank’s move to launch QE3 (quantitative easing for the third time) in an attempt to ease the country’s  persistent high unemployment rates.

The Fed announced it will begin buying $40 billion in mortgage-backed securities per month to keep mortgage rates low, bolstering the stagnant housing market. It will continue the purchases, or as it calls “open-ended,” until a significant improvement in employment is seen, which it considers a serious concern.

Expectations now are for low, almost zero, interest rates to be in place into 2015, and even when the economy looks to be turning around, Fed Chairman Ben Bernanke says, “We won’t rush to tighten.” That will give time to make sure the recovery is well established.

The Fed Chairman is not concerned about driving up inflation due to the move and expects the rate to remain in its target range of about 2 percent.

Debate continues regarding the recent inflation in food and energy prices, with one side blaming the easing monetary policy and others citing the global supply and demand issues.

Operation Twist, selling shorter-dated government debt and buying longer-term securities, will stay in effect, and it will continue to reinvest principal payments from agency debt and mortgage-backed securities.

The markets showed support for the announcement and drove the Dow Jones Industrial Average up over 200 points, and the S&P 500 reached 5-year highs. In the bond market, 30-year mortgage rates closed the day at 3.55 percent, just above the record low of 3.49 percent, and the typical refinancing option of 15-year mortgages were also just off the record at 2.85 percent.

Home builder stocks rose, as did financial stocks, especially Bank of America’s shares, up almost 5 percent, as they are the dominant player in mortgage-backed securities.

The Fed adjusted some of its forecasts giving some rationale to the move. It now feels that growth for the U.S. 2012 GDP will be 1.7 percent to 2 percent, higher than the previous estimate from last June of 1.9 percent to 2.4 percent. The Fed also estimates the unemployment rate to stay between 8 percent to 8.2 percent this year, and above 7 percent until 2014.