The Federal Reserve says:
FRB: FAQ: the Federal Reserve's responsibilities fall into four general areas... (1) conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices...
Fed to buy $600 billion in government bonds The Fed: The Federal Reserve pledged on Wednesday to start a controversial new billion bond-buying spree to rescue the economy from its current doldrums. The Fed said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, about $75 billion this month, in a strategy called quantitative easing.... To implement the Federal Reserve’s new policy of quantitative easing, the New York Fed plans to buy $850 billion to $900 billion in Treasury notes over the next five months, including $600 billion in new purchases and about $250 billion to $300 billion to reinvest the proceeds of maturing mortgage-backed securities, the New York Fed announced Wednesday. The average duration of Treasurys purchased by the Fed will be five to six years...
The five-year note carries an interest rate of 1.17% per year. The Federal Reserve is thus changing the supply of assets by taking onto its own balance sheet... wait for it... wait for it... duration risk that the market is currently willing to pay $7 billion a year to avoid.
To take $7 billion a year of duration risk off of the private sector's books in a global economy that still has more than $60 trillion of financial assets is a change in "credit conditions" equivalent to what would be achieved in normal times by a coordinated one basis point reduction in short-term interest rates by the world's central bankers.
Unless this moves inflation expectations in a serious way, it is hard to see why they came out here.