Operation Twist is Here
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Ben Bernanke and the FOMC confirmed plans to change the composition of the Federal Reserve balance sheet, moving out of longer-term securities and into shorter-term. The members cited "significant downside risks to the economic outlook, including strains in global financial markets."
The FOMC intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.
This program from the Fed should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.
The Fed also said it will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The existing policy of rolling over maturing Treasury securities at auction will be maintained.
As previously announced, the Fed will keep the federal funds rate at exceptionally low levels at least through mid-2013.
Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.
The FOMC intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.
This program from the Fed should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.
The Fed also said it will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The existing policy of rolling over maturing Treasury securities at auction will be maintained.
As previously announced, the Fed will keep the federal funds rate at exceptionally low levels at least through mid-2013.
Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.
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Charles Plosser, Ben S. Bernanke, Federal Open Market CommitteeSign up for StreetInsider Free!
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