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Markets were unimpressed by the Federal Open Market Committee’s announcement last week that it would move forward with its Maturity Extension Program and Reinvestment Policy. More commonly cited as Operation Twist in reference to a similar program undertaken 50 years ago, this latest monetary policy intervention will see the Fed sell $400 billion in shorter duration securities between now and next June. Over the same period, the Fed will purchase an equivalent dollar volume of securities with six to thirty-year maturities. The goal of this rebalancing is to push longer-term rates lower, supporting more accommodative financial conditions than can be achieved through the Fed Funds target alone. Whether Operation Twist will achieve its goal, and whether it matters for the economic outlook, are questions for debate.

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