The US Federal Reserve took aim at slow growth and high joblessness, announcing a new, open-ended $40 billion per month bond-buying program as it slashed its 2012 growth forecast. The Fed said the new monetary easing effort would remain in place until it sees substantial improvement in the US jobs market, where 8.1 percent of Americans remain unemployed. Doubling up on its message to banks, industry and consumers that holding their money unused would essentially cost them, the US central bank also pledged to keep its benchmark interest rate at ultra-low levels until at least mid-2015. By then, it hopes, economic growth will have begun generating the jobs and spending levels necessary to be self-sustaining. The news gave new life to US stocks, with the S&P 500 closing up 1.63 percent, and the Dow 1.55 percent. The dollar fell, $1.30 line against the euro before falling back to $1.2987 in late trade. Pointing to weak growth and stagnation in hiring, the Fed said it would begin on Friday spending $40 billion each month on mortgage-backed securities, its third \"quantitative easing\" program in less than three years. \"QE3\" would take the US central bank\'s total monthly purchases, including ongoing programs, to $85 billion a month, the Fed said. That \"should increase the downward pressure on long-term interest rates more generally, but also on mortgage rates specifically, which should provide further support for the housing sector, encouraging home purchases and refinancing,\" said Fed Chairman Ben Bernanke. The effect should spill through to the broader economy, pushing up the prices of homes, stocks, and other assets that, the Fed hopes, will make Americans feel more financially comfortable and begin spending. If currently insecure and tight-fisted Americans are more willing to spend, Bernanke explained, \"That\'s going to provide the demand most firms need to be able to hire or invest.\" The Federal Open Market Committee, the Fed\'s policy board, also said its monetary stimulus efforts will remain in place \"for a considerable time after the economic recovery strengthens,\" a promise it had not made before. \"If the outlook for the labor 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.\" \"We\'re just trying to get the economy moving in the right direction to make sure that we don\'t stagnate at high levels unemployment,\" Bernanke told reporters. The unemployment situation remained a \"grave concern,\" he said, adding: \"The weak job market should concern every American.\" The FOMC cut its forecast for growth this year to 1.7-2.0 percent from the previous 1.9-2.4 percent range, though it predicted a pickup to 2.5-3.0 percent in 2013. The jobless rate would still be in the 6.7-7.3 percent at the end of 2014, while inflation, would remain at or below the Fed\'s 2.0 percent target through 2015. After months of debating whether to embark on new stimulus, all but one of the 12-member FOMC fell in line with Bernanke\'s worries about persistent high joblessness. \"As we look at the last six months, we\'ve seen unemployment basically the same place it was in January. We\'ve seen not enough jobs growth to bring down the unemployment rate and what we need to see is more progress,\" Bernanke said. \"There is not a specific number we have in mind. But what we\'ve seen last six months isn\'t it,\" he said. Jim O\'Sullivan of High Frequency Economics said that while the Fed\'s move will not have much immediate effect, it will act on the economy \"like a time-release capsule, the effects of which increasingly kick in over time.\" \"\"More accomodative financial conditions can only add to growth over time, even with the impact of monetary policy diluted relative to earlier cycles,\" he said. \"The Fed news reinforces our view that 2013 growth is likely to be stronger than widely expected, with momentum building as the year progresses.\" But other analysts were more doubtful, pointing to external risks to the economy from Europe and China and the political stalemate over fiscal policy, which Bernanke conceded he has no leverage over. \"Bernanke is marching US monetary policy even further into totally uncharted territory,\" said John Ryding and Conrad DeQuadros and RDQ Economics. \"Our view is that these actions will do little to stimulate growth but will raise inflation expectations,\" they said.