Excerpt from: Spot Forex
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| January 28, 2009 | | Fed considers options to help stimulate the economy |
There is a chance that the U.S. Federal Reserve will begin buying Treasuries. While a Fed rate cut to 0% isn't seriously expected to come of today's Federal Open Market Committee (FOMC) meeting, many do expect the Fed to work on economic stimulus.
One of the things that the FOMC is reportedly considering is the idea of buying long-term securities -- including Treasuries. Mortgage News Daily reports on the issues surrounding a Fed purchase of Treasuries:
According to Michael Feroli, an economist at JPMorgan, the most
interesting aspect of the FOMC meeting will not be whether rates are
cut, but rather if the Fed will begin to consider purchasing long-term
securities.
"If such action -- purchasing Treasuries -- were costless to the
Fed, the course for policy would be clear," Feroli wrote. "However,
there are perceived costs. One of these is the uncertainty as to how to
effectively conduct open market operations in longer-dated Treasuries."
| Topic Tags: buying Treasuries, economic stimulus, Federal Reserve, Fed rate 0%, securities, spread bets Treasuries, spread betting bond market, Treasuries | |
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