Fed moves to lower long-term rates more

In a further bid to shore up the anemic economy, the Federal Reserve Board will buy $400 billion in long-term Treasury securities by June 30.
The new program, called “The Twist” after a similar ‘60s-era program, means the Fed will sell its holdings of short-term Treasuries to finance its purchases on long-term notes and bonds.
Also, the key fed funds rate will remain between 0 percent and 0.25 percent, probably through June 2013, and the Fed will buy mortgage-backed securities to keep mortgage rates low.
The Dow Jones industrial average plunged 284 points, or 2.5 percent, to 11,125, after the announcement. The bellwether 10-year Treasury note yield fell to 1.86 percent. The dollar rallied against the euro and the yen.
The Fed’s moves will presumably lower mortgage rates further. The current 30-year fixed-rate mortgage rate is 4.09 percent, the lowest since mortgage giant Freddie Mac began tracking them in 1970.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s