Fed officials signaled heightened worries over the economy, extending a program shifting their holdings toward longer-term securities through the end of the year and said they were "prepared to take further action" if needed.
By Investment U:
By Jason Jenkins
On Wednesday, the Federal Reserve announced it would proceed with a new $400-billion program that will tilt its $2.85-trillion balance sheet more to longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated Treasuries. It’s rationale?
By Josh Cohen:
Despite the predictions of two major investment banks about which I wrote yesterday, the FED opted not to launch QE3 today. While the FED did not announce QE3, it did elect the extend Operation Twist through the end of this year. I believe, however, that the extension of Twist will not be of much help to the real economy.
By Tim Iacono: I'll have more about yesterday's developments at the Federal Reserve after the central bank releases its updated economic forecasts and Fed Chief Ben Bernanke conducts another one of his quarterly press conferences.
WASHINGTON — The Federal Reserve is extending a program intended to further lower long-term interest rates, noting hiring has weakened, consumer spending is rising more slowly and the economy needs more support. The Fed will continue Operation Twist through the end of the year.
Without directly addressing the slides that Tyler linked to, I want to make a quick comment about the Fed's new Operation Twist. The idea is to twist long and short rates by buying more long-term securities and paying for them with sales of shorter-term ones. The hoped-for reduction in long term rates would benefit mortgage holders and others on the consumer side, but also spur investment.