From the press release:
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.The stock market immediately moved upwards from the news, reducing the losses for the day. The ten year treasury bond shot upwards in value.
A few comments regarding the change in policy:
Before the announcement the Fed intended allowing MBS principal paydowns to slowly reduce the Fed's balance sheet over time which would have reduced the quantity of narrow money in the economy. With this news the the Fed's balance sheet will remain the same size (for now) but the composition will change from GSE backed assets to Treasury bonds and bills.
If the Fed had allowed the MBS paydowns to shrink their balance sheet the narrow and broader money supplies would have shrunk as well. As you can see from this chart the M2 gauge of money supply has been very sluggish of late and shrinking the Fed balance sheet at this time would have slowed M2 growth even further.
This measure is not stimulative, no more money is going to be injected into the system.
If the economy was on the mend why did the Fed alter their strategy of slowly removing this stimulus?