Federal Reserve Releases Plan
The Federal Open Market Committee has decided to shift $400 billion of short-term holdings into long-term government bonds. This is a part of the Federal Reserve’s plan to reinvest principal payments on some bonds in mortgage-backed security. This plan will continue to influence rates in a downward direction. The plan also involves longer-term Treasury security with remaining maturities of 6 to 30 years that will be financed through the sale of shorter-term Treasuries with maturities of 3 or less years.
“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative” the FOMC said in a statement following its two-day meeting.
The plan begins October 3rd and continues into June.