What The Fed Said

The Fed's big policy statement just came out. To no one's surprise, the Fed announced Operation Twist — though the Fed, in its Feddy way, didn't use the that phrase.

Instead, the Fed said:

...the Committee decided today to extend the average maturity of its holdings of securities.

We explained Operation Twist in a post this morning. Still, this afternoon's statement (and this accompanying FAQ) adds some useful, wonky, details.

* The Fed will sell $400 billion in Treasuries that mature in three years or less. They'll replace those with Treasuries with maturities ranging from six to 30 years.

* At the moment, the average maturity of the bonds held by the Fed is just over six years. By the end of Operation Twist, that will be extended to just over eight years.

* Of the 10 people on the Fed's policy committee, three voted against Operation Twist. They thought the Fed shouldn't take additional steps to try to spur economic growth right now. The same three people voted against the majority in the previous Fed meeting. It's unusual for there to be so much dissent for the Fed.

* One other thing: The Fed also owns hundreds of billions of dollars in mortgage bonds. Today's statement said the Fed will use the proceeds from those to buy more mortgage bonds. That should help keep mortgage rates super low.

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