The Federal Reserve's Open Market Committee on Wednesday voted 7 to 3 in favor of "Operation Twist" in an attempt to "put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative," according to the committee's statement.

Stock markets, which had been mixed prior to the announcement, promptly tanked. The Dow ended the session with a 2.5% drop; the NASDAQ shed slightly more than 2% and the S&P sank almost 3%.

Under the plan, named for a similar effort tried back in 1961, the Fed will will purchase $400 billion in Treasurys with remaining maturites runnong from 6 to 30 years and sell an equal amount with maturities of three years or less. The dissenters, and many Republicans, fear the move could drive up short term interest rates and lead to inflation.

The committee also will reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and maintain existing policy of rolling over maturing Treasury securities at auction.

The FOMC reiterated its intention to keep the target range for the federal funds rate at 0% to 1/4%.

Regarding the economy, the Fed statement said, "Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed."

The committee said it expected "some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually" and that "there are significant downside risks to the economic outlook, including strains in global financial markets."

For now, the FOMC, aside from the three dissenters, is not concerned about inflation. "Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks," the statement said. "Longer-term inflation expectations have remained stable."