U.S. Fed twists again

Dec 12, 2012, 5:02 PM EST
U.S. Federal Reserve Chairman Ben Bernanke smiles during a news conference in Washington December 12, 2012.
REUTERS/Kevin Lamarque

The U.S. Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, Operation Twist, that was due to expire at the end of this month. The Fed also linked the outlook for its main interest rate to unemployment and inflation for the first time, saying it would hold its near-zero rates at least until unemployment fell to 6.5% providing inflation, as it expected, was no higher than 2.5%. U.S. Treasuries prices fell following the announcement. Thirty-year bonds fell particularly sharply as the Fed said its new bond-buying program will shift more of its purchases to the five-year sector.