I'm not an expert but I'll try. The Federal Reserve is buying mortgage backed securities to keep the mortgage interest rates low. Those securities are the way that banks that give you a mortgage raise their money. The federal reserve is also trying to keep longer term interest rates lower by selling short term bonds and using the proceeds to buy long term bonds (operation Twist). The general idea is to spur economic activity by increasing the money supply. ( http://en.wikipedia.org/wiki/Quantitative_easing )
The most significant thing this signals, in my opinion, is the expectation that the economy will continue to do poorly in the short and medium term. People have equated these policies to pushing on a rope, the Fed can lower the rates but it can not force companies to take loans and higher risks.
As an individual you may be able to refinance your debt at a lower rate. As a company you may be able to borrow money at a lower rate. In the real world however (as someone involved in a business who just got a bank loan for 6%) this doesn't always work.
The stock market may go higher because lower rates make bonds a less attractive investment. The only problem is the bond market isn't as impacted because some people feel the Fed will not be able to continue maintaining lower yields due to inflation.
The most significant thing this signals, in my opinion, is the expectation that the economy will continue to do poorly in the short and medium term. People have equated these policies to pushing on a rope, the Fed can lower the rates but it can not force companies to take loans and higher risks.
As an individual you may be able to refinance your debt at a lower rate. As a company you may be able to borrow money at a lower rate. In the real world however (as someone involved in a business who just got a bank loan for 6%) this doesn't always work.
The stock market may go higher because lower rates make bonds a less attractive investment. The only problem is the bond market isn't as impacted because some people feel the Fed will not be able to continue maintaining lower yields due to inflation.
(EDITed with some more thoughts)