In What the Fed’s “Operation Twist” Means for Mortgage Rates, we examine how the Fed’s plan to trade in short-term government bonds for medium- and long-term bonds will affect long-term interest rates, like mortgage rates. If you’d like to view the references used to write this article and learn more about what Operation Twist is all about, read on.
Conducting Monetary Policy at Very Low Short-Term Interest Rates (Federal Reserve Board)
This is the paper written by Ben Bernanke in 2004 in which he discourages using the strategy of changing present interest rates through buying and selling bonds in order to combat high long-term interest rates.
GOP to Bernanke: No new stimulus (CNN Money)
Congressional Republicans are urging Bernanke to refrain from changing monetary policy in order to stimulate the economy because there’s no proof his plan will work.
Fed dissenters speak out (CNN Money)
Three regional Fed presidents, Richard Fisher of Dallas, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia, expressed their dissent regarding Operation Twist back in August. This was the first time since 1992 that a Fed policy garnered so much internal disagreement.
Mounting concerns over Fed’s Operation Twist (Citywire)
Andrew Milligan, head of global strategy at Standard Life Investments, and Rupert Watson, head of asset allocation at Skandia Investment Group both fear that Operation Twist will not make a positive impact and ultimately fail.
