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The Federal Reserve Announces An Extension Of $400 Billion In Treasury Bonds.

2011/9/22 10:55:00 28

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The US Federal Reserve Extends The Term Of 400 Billion Treasury Bonds.

The US Federal Reserve announced on the 21 day that it will extend its holdings of US $400 billion.

National debt

Deadline and other measures to stimulate economic recovery.

The Federal Reserve Open Market Committee issued a statement on the same day after a regular meeting of monetary policy decisions, saying that US economic growth remained slow, the overall employment market continued to be weak and the unemployment rate remained high. Investment in non residential buildings was still weak and the real estate market remained depressed.

However, business investment in equipment and software continues to grow, and inflation has been suppressed as energy and some commodity prices have fallen from high and long-term inflation expectations have remained stable.

The statement said that in order to further stimulate the economy

recovery

The Federal Open Market Committee of the Federal Reserve made a decision to replace the term of treasury bonds with "short selling long" to sell the Treasury bonds. That is, it plans to sell 400 billion U.S. dollars of treasury bonds with a period of 3 years or less by June 2012, while buying the same amount of medium and long-term treasury bonds with a term of 6 years to 30 years.

This measure is actually equivalent to extending the duration of its holdings of US $400 billion treasury bonds, aimed at lowering long-term interest rates.

At the same time, the Federal Reserve will regularly review the size and composition of the Treasury bonds and will adjust the assets as the case may be.

The statement said that in order to support the mortgage market, the Fed will also reinvest its holdings of institutional debt and institutional mortgage-backed securities.

In addition, the Fed will maintain the existing policy of expending the maturity of treasury bonds through auctions.

In terms of interest rate policy, the Fed decided to keep the federal funds rate unchanged at zero to 0.25%.

Since December 2008, the federal funds rate has remained at such a low level. The Federal Reserve announced last month that it would keep the interest rate at least until the middle of 2013.

The Fed also said that the Federal Open Market Committee has discussed the tools to stimulate economic growth in keeping inflation stable, and will continue to assess the economic outlook and take appropriate measures according to the situation.

From the Fed day

currency

According to the polling results of the regular meeting, 7 members of the monetary policy committee including the chairman of the Federal Reserve Bernanke voted in favour of the policy, but 3 members voted against it.

The Federal Open Market Committee is the Federal Reserve's monetary policy making body. It usually holds 8 interest rate decision meetings each year. The chairman of the Federal Open Market Committee is chaired by the chairman of the Federal Reserve.