Fed replaces Twist and sets explicit targets

FXstreet.com (Córdoba) - The Federal Reserve announced on Wednesday it will continue to purchase additional agency mortgage-backed securities at a pace of $40 billion per month (QE3) and said it would initially begin buying $45 billion of long-term Treasury bonds each month, in an effort to support a stronger economic recovery.

The latest stimulus from the Fed will replace the expiring program known as "Operation Twist," in which the Fed has been buying about $45 billion of long-term Treasury bonds each month and selling about the same amount of short-term Treasurys. Unlike Twist, the new bond-buying program will expand the size of the Fed's portfolio of assets.

Meanwhile, the Federal Reserve also shifted its communication strategy saying that interest rates will remain exceptionally low (at 0-1/4%) as long as the unemployment rate stays above 6.5% and inflation between 1-2 years ahead is projected to be no more than a half percentage point above the Committee's 2% longer-run goal.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.