The Federal Reserve has reached back to the 1960’s trying to implement a policy that will lower interest rates to spark economic growth.
The Federal Reserve’s Open Market Committee voted 7-3 Wednesday to embark on what’s informally called “Operation Twist,” taking the unusual step of shifting $400 billion into longer-term bonds, according to POLITICO.
The Fed issued a statement outlining its intentions:
The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
According to reports, the Fed has taken it upon itself to fix the economy because of running stalemates between the Administration of Barack Obama and Congress. Many lawmakers believe the latest action is very risky, saying that further intervention by the Fed will erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers.