WILL the TWIST Lower Mortgage Rate?
Cubby Checker was singing & doing the TWIST back in 1961.
That’s last time the Federal Reserve seriously attempted to flatten out the Short and Long Term Yield Curve!
The policy back then was nicknamed: Operation Twist inspired by Cubby’s hit dance tune. The Fed has dusted off this obscure monetary maneuver used back then.
What's being twisted, in this case, is the shape of the yield curve. By replacing short-term bonds in its portfolio with longer-term ones, the Fed is attempting to bring down the long-term interest rates that matter most to homeowners and corporate borrowers.
The Fed has made this unconventional move to the tune of $400 Billion, and many economists think it wasn't very effective 50 years ago. Yet the Fed is counting on bringing long term rates down!
Operation Twist is now the next step that has been unleashed by their depleted arsenal!
No comments:
Post a Comment