BOTTOM LINE: Fed extends twist operation through year end; no change to “late 2014” funds rate guidance. Statement suggests downgrade to GDP and unemployment rate outlook.
1. The FOMC announced today that it will continue its Maturity Extension Program (MEP)—better known as the “twist”—through the end of the year. The operation will include sales and purchases of Treasury securities totaling $267bn, according to a statement from the New York Fed. The maturity composition of purchases will match the first phase of the MEP. The Fed will sell securities with remaining maturity of “approximately 3 years or less”; the statement from the New York Fed said that once the program is complete, the Fed will hold almost no securities maturating through January 2016 (thus the Fed effectively extended the window over which sales could occur). It will continue to reinvest MBS paydowns into the mortgage market.
Print 17:54, 20 Jun 2012 - Economic commentary - Source: Zerohedge
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