2008 Financial crisis – SEP/OCT 2008
After Crisis, FED wanted to improve the economy, business sentiments and labour conditions in the US. Started rounds of QE :
QE1: Nov. 25, 2008 - March 31, 2010
FED purchased a total of
1.25 Trillion dollar Mortgage backed securities to lower mortgage interest
rates and increase the availability of credit for homebuyers to help support
the housing market and improve financial market conditions.
QE2: Nov. 3, 2010 - June 30, 2011
The Fed continued to
reinvest payments on securities purchased during the QE1 program. In addition,
it began the purchase of $600 billion of longer-term Treasury securities to
promote a stronger pace of economic recovery.
Operation Twist: Sep 21, 2011 – June 30, 2012:
Fed announce to purchase
$400 billion of bonds with maturities of 6 to 30 years and to sell bonds with
maturities less than 3 years, thereby extending the average maturity of the
Fed's own portfolio.
This is an attempt to do what Quantitative Easing (QE) tries to do,
without printing more money and without expanding the Fed's balance sheet,
therefore hopefully avoiding the inflationary pressure associated with QE
QE3 ?? Next soon..
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