The Federal Reserve announced it would spend $40 billion a month on bond purchases in an effort to stimulate the economy and drive the the unemployment rate down.

The Wall Street Journal says that unlike the first two rounds of Quantitative Easing, this time the Fed will focus solely on buying mortgage-backed securities.

In its statement, the Federal Reserve said the economy was growing but at a sluggish pace.

"The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Federal Open Market Committee said. Remember the Fed has a dual mandate from Congress: keep inflation and the unemployment rate in check.

This action also represents an open-ended commitment on the part of the Federal Reserve, which said it was not concerned about inflation at this time.