Ben Bernanke’s twisted choice

Is US central bank boss Ben Bernanke finally questioning the benefits of QE3?

That seems to be the message following the Fed’s decision overnight not to launch a third round of quantitative easing – dubbed QE3 – which would see it embarking on an aggressive bond-buying spree.

Instead, the Fed decided to continue with its much more modest “Operation Twist” program, under which it sells short-term bonds, and uses the proceeds to buy long-term bonds with the aim of pushing long-term interest rates lower. The original $400 billion “Operation Twist” program – which kicked off last September – had been due to expire at the end of this month. But last night’s decision means that the Fed will be busy “twisting” until the end of the year, buying $267 billion of long-term bonds (with maturities between six and 30 years) and selling bonds that mature in three years or less.

For the full story visit Business Spectator.