Officials Consider Unusual Steps to Avert an Economic Stall
The WSJ’s ace Fed reporter Jon Hilsenrath says the Fed is considering 3 options for further easing at its two-day meeting September 20-21.
- So called “operation twist.” Extending the duration of the Fed’s bond portfolio by selling the short-end and buying more long-dated bonds, to push the end of the curve even lower.
- Another possibility is to reduce the interest on excess reserves that banks hold with the Fed as a spur to hold fewer reserves and lend more money.
- Finally, the Fed might use even clearer language to emphasize that it will hold rates very low for a long time.