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FED extending the unconventional Operation Twist (Economist)

The Federal Reserve will purchase $267 billion of long-term bonds by the end of the year, paid for from the proceeds of sales of short-term bonds, extending the Operation Twist, announced last autumn, under which the Fed swapped $400 billion of short-term bonds for long-term ones. The unconventional initiatives are designed to drag long-term interest rates down in the hope of stimulating demand.
Federal Reserve statement:
"The (Federal Open Market) Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook."
FED Chairman, Ben Bernanke, on Europe:
"We hope it doesn't get worse. I think it's already one of the factors that has been a drag on the US recovery ...We think that the policy makers in Europe have very strong incentives to get this right ...But again it's also important for us to be prepared for any further problems that might emerge from Europe."
source: The Federal Reserve extends "Operation Twist" | The limits of the unconventional | The Economist

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