"...implied inflation expectations soared higher subsequent to the FOMC's December announcement that it would continue to purchase $45 billion of long-term Treasuries after Operation Twist ends...
...In addition, it eliminated the calendar date guidance on how long it anticipated keeping interest rates at zero. Instead, it replaced the calendar date with an unemployment target of 6.5% as long as one- to two-year inflation projections are below 2.5%.
Based on the Federal Open Market Committee's current projections, unemployment would decline to that level sometime in the first half of 2015. If the Fed were to purchase $45 billion...through then, it will increase its holdings by approximately $2.5 trillion, nearly doubling the size of its current balance sheet.
...Considering the zero interest rate policy was launched in December 2008, that target would entail six and a half years of ZIRP."
No comments:
Post a Comment