Fed tries to boost economy

WASHINGTON (AP) - The Federal Reserve said Wednesday it will shuffle $400 billion of its portfolio to try to drive down long-term interest rates and get the economy going. But economists doubted it would do much good, the stock market sold off, and the Fed itself was unusually divided over the strategy.

Lowering interest rates makes it cheaper for people and companies to borrow money and spend it throughout the economy, which has slowed sharply more than two years after the Great Recession. Consumer spending makes up most of the nation's economic activity.

But rates are already at historic lows. Americans, still feeling insecure about the future, might not be willing to take on more debt, even at lower rates. Others see no reason to jump into the housing market when prices are still falling. Others can't get credit.

"Frankly, I don't see it having any meaningful impact on the economy," said Bernard Baumohl, chief global economist with the Economic Outlook Group. "What the Fed did today was a distraction."

Along with the strategy statement, the Fed gave a stormy overview of the economy - slow growth, high unemployment and a slumping housing market. The Fed has already said it will keep short-term interest rates super-low into 2013, a sign that the central bank was not optimistic about the next two years.