At its 20-21 September meeting, the Federal Open Market Committee (FOMC) voted to extend the average maturity of its holdings of securities in an attempt to rekindle the faltering economy. In addition, the FOMC left federal funds rate unchanged within the historically-low range of 0% to 0.25% reiterating that conditions are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The move, commonly referred to as Operation Twist, is an attempt by the Federal Reserve to bring down long-term interest rates. To accomplish this, the Fed will sell USD 400 billion of Treasury securities with remaining maturities of 3 years or less and, simultaneously, purchase longer-term Treasury securities by the same amount. Lower long-term Treasury yields, in turn, are expected to translate into lower rates in the rest of the financial system, thus helping to make broader financial conditions more accommodative. The move was met with scepticism by the market, as there are doubts about the Fed's ability to further reduce long-term yields and its effectiveness on boosting growth, considering that interest rates are already at very low levels by historical standards. Markets tumbled following the Fed's announcement.
United States Monetary Policy
Fed launches "Operation Twist" to revive economy
September 21, 2011
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United States Economic News
United States: Clinton’s lead over Trump widens but presidential election results are still uncertain
October 20, 2016
Only a few weeks ahead of the 8 November presidential elections, major polls suggest that Hillary Clinton has extended her lead over Donald Trump, but the presidential race will be decided in the most fiercely contested states.
October 14, 2016
In September, nominal retail sales expanded 0.6% over the previous month.
October 7, 2016
Non-farm payrolls grew 156,000 in September, which came in below August’s upwardly-revised increase of 167,000 (previously reported: +151,000).
October 3, 2016
The ISM manufacturing index increased more than expected in September and returned to expansionary territory, after a temporary setback in August.
September 27, 2016
The S&P/Case-Shiller 20-city home composite index rose 0.6% in July over the previous month.