This preview shows page 1. Sign up to view the full content.
Unformatted text preview: nding costs down. By purchasing longer maturity treasuries, it hopes to keep the rate on the
10-year treasury low. Additionally, the Federal
Reserve has also stated that it will take principal
cash flows from its mortgage holdings and reinvest them in the mortgage market rather than in
treasuries. Again, this is driven by a desire to keep
mortgage funding costs down.
This has been the response of the Federal Reserve
to the end of its second round of quantitative
easing (QE2). Operation Twist is not quite a third
iteration of quantitative easing, although there is
speculation that round three is in the queue. For
at the November Federal Open Market Committee (FOMC) meeting, there was one dissension.
However, this dissension was not like those voiced
by the now-retired Kansas City Federal Reserve
President Hoenig calling for restraint. No, this dissension was a call for more policy accommodation
by the Fed, requested by Chicago Federal Reserve
Why the obsession with supporting asset values,
notably, real estate values? Because deflation is still
View Full Document
This note was uploaded on 02/11/2013 for the course MGMT 231 taught by Professor Yu during the Spring '13 term at Bauder.
- Spring '13
- The Lottery