Fed ramps up aid to economy with $400 billion 'twist'
The Federal Reserve dialed up its aid to the beleaguered US economy, launching an effort to put more downward pressure on long-term interest rates over time and help the battered housing sector.
The Fed said it would launch a new $400 billion program that will tilt its $2.85 trillion balance sheet more heavily to longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated Treasuries.
It will now also reinvest proceeds from maturing mortgage and agency bonds back into the mortgage market, an acknowledgement of just how weak conditions in the sector have remained.
"Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated," Fed said in its statement.
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