The Fed's 'Twist' And The U.S. Economic Outlook
By Calder H. Lamb:The Federal Reserve has announced that it will continue "Operation Twist" and will not engage in additional QE measures. The Federal Reserve issued a news release today, June 20th, that stated, in part:
The Committee intends to purchase Treasury securities with remaining maturities of six years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately three years or less.
The Fed believes that by purchasing long-term Treasuries and selling shorter-term Treasuries it can exert downward pressure on future interest rates. The Fed believes the downward pressure will make general financial conditions more accommodative. At the end of the press release, the Fed reiterated a message it has repeated again and again: "The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in contextComplete Story »