What the New Federal Reserve Monetary Policy Plan Means for Your
The Federal Reserve concluded its latest meeting on Wednesday by enacting additional monetary policy measures and a historic change in the way the central bank communicates its intentions.
With “Operation Twist” ending this December, the Federal Reserve decided to continue its monetary policy program of purchasing $45.0 billion of long-term treasuries each month. This is in addition to the ongoing monetary policy program of purchasing $40.0 billion of mortgage-backed bonds per month. (Source: Press release, Federal Reserve web site, last accessed December 12, 2012.)
This action by the Federal Reserve is not really a new monetary policy initiative, but a continuation of the existing plan, Operation Twist. The Federal Reserve still sees a weak American economy that it believes needs additional stimulus.