Fed's Bullard Wants to Change $45B Twist to $25B Outright
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Dallas Fed President James Bullard told reporters at the WSJ that the Fed's so-called Operation Twist is not as stimulative as outright purchases, and he favors ending Twist's $45B per month in purchases in favor of $25 billion in outright purchases.
"I think the Twist operation is probably not as stimulative as the outright purchase operation. So I think you could have slightly less purchases, less than the $45 billion, and still get the same amount of stimulus that you would get in a Twist program," said Bullard.
When asked how much he would like to dial back purchases, Bullard said, "Half as much on outright purchases would be as effective. So $45 billion in Twist, you could go down to $25 billion in outright purchases and probably get the same stimulative impact."
Fed policy makers will be meeting on December 11th and 12th to discuss program changes. Though most view large changes as unlikely, Bullard's comments are sure to get Fed-watchers' attention.
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"I think the Twist operation is probably not as stimulative as the outright purchase operation. So I think you could have slightly less purchases, less than the $45 billion, and still get the same amount of stimulus that you would get in a Twist program," said Bullard.
When asked how much he would like to dial back purchases, Bullard said, "Half as much on outright purchases would be as effective. So $45 billion in Twist, you could go down to $25 billion in outright purchases and probably get the same stimulative impact."
Fed policy makers will be meeting on December 11th and 12th to discuss program changes. Though most view large changes as unlikely, Bullard's comments are sure to get Fed-watchers' attention.
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