Fed Opts To Extend Operation Twist, Which Will Likely Accomplish Nothing

Wed, 06/20/2012 - 16:44 EDT - Seeking Alpha

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.The idea behind Twist is that the FED sells some of its shorter-term assets while it simultaneously buys longer-term assets. The FED made the following statement today after the FOMC meetings closed:
The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturitiesComplete Story »

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Fed Opts To Extend Operation Twist, Which Will Likely Accomplish Nothing

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