Fed to extend distorted operating

June 19 to 20, the Fed held a meeting on interest rates, responsible for monetary policy of the Federal Open Market Committee (FOMC) a description of the U.S. economy even bleaker than two months ago.

The FOMC said in the announcement of the Fed's official website, the slowdown in U.S. job growth, consumer spending growth is more subdued. The committee warned that the global financial tensions continue to bring "significant downside risks to U.S. economic outlook. The same time, FOMC lowered the employment expectations for the coming year, the employment targets set for the end of 2013, the unemployment rate within 7.5%.

According to the announcement of the Fed's official website before the meeting on interest rates, the Monetary Policy Committee shown through research, if not postponed the current distortions operation, long-term financing costs will be upstream and further threaten the already weak economic recovery.

Under the judgment of this market, the Fed ultimately decided to extend the distorted operating until the end of this year. Through the distortions, the Fed will sell $ 267 billion in short-term government bonds, to buy an equal amount of 6 to 30-year Treasury bonds.

By distorting the operation, the Fed hopes to reduce the long-term bonds on the market, including mortgages, long-term corporate bonds, including long-term financial assets, interest rates, thereby reducing borrowing costs and stimulate economic recovery and to reduce unemployment.

Distort the operation after this extension, the average maturity of the Fed holds assets from the current 100 to extend to 120. Federal Reserve data show that ended June 21, the Fed holds a total of $ 166.3 billion of U.S. Treasury bonds.

But this is not true all at the press conference after the meeting on interest rates, Bernanke advance warning, if the performance on the job market is still not satisfactory, the Fed will take a series of related measures, for example, to further expand the asset purchase of the scale, such assets will be included in the current bank's illiquid real estate mortgage.


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