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Bilifuduo (98.40)

Awww... No QE3

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June 20, 2012 – Comments (0)

Instead of a systematic round of quantitative easing involving the large-scale purchase of a combination of assets such as mortgage-backed securities and bonds, the Federal Reserve has instead decided to extend Operation Twist, which was set to end this June, to the end of the year. This program involves the Fed selling medium-term bonds and using the proceeds to buy longer-term ones. As noted in the press release, the Federal Open Market 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 maturities of approximately 3 years or less." Federal Reserve Chairman Ben Bernanke also stated that the Federal Reserve "isn't going to be buying European sovereign debt."

 

Do not expect much from the Federal Reserve committee meetings later in the year. Although the Federal Reserve state that it "is prepared to take further action," it has historically been reluctant to implement significant measures, whether quantitative easing or otherwise, as the presidential elections get closer. 

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