THE BLAZE: So What is the Fed‘s New ’Operation Twist?’

September 22, 2011

The Federal Reserve announced yesterday that it will use more than $400 billion to try to drive down long-term interest rates, make home and business loans cheaper and invigorate the economy.


Analysts said the moves would provide only a slight economic benefit.

The plan the Fed unveiled, dubbed “Operation Twist,“ resembles a program the Fed used in the early 1960s to ”twist” long-term rates lower relative to short-term rates.
“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative” the Fed said in its official statement according to a recent CNN Money article.


In its statement, the Fed noted that the economy is growing slowly; unemployment is high and housing remains in a prolonged slump.

“This is a measured response to weak economic conditions,” said David Jones, head of DMJ Advisors and the author of four books on the Fed.

“The Fed is still trying but it can only do so much,” he said in the AP report.

MORE:  http://www.theblaze.com/stories/so-what-is-the-feds-new-operation-twist/