What Is Operation Twist?

Sep 21, 2011
J. Webster
Comments Off on What Is Operation Twist?

This old school dance move is being used by Ben Bernanke’s federal reserve to help revive the economy. What is it exactly? It’s where the federal reserve sells $400 billion in short-term treasuries in exchange for buying the same amount of long-term treasuries over the coming months. The goal or the hope for the strategy is to further drive down interest rates to get people to borrow and spend more money.

However, what with interest rates already at extremely low levels, many think this ‘operation twist‘ will have little effect on the economy. Even with interest rates at crazy low numbers right now, the housing market remains at a standstill, and with home prices going lower.

“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accomodative” the Fed said in its official statement.

Read more about operation twist over at CNN Money.

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