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Hilsenrath Says Fed Unlikely to Halt Bond Buying

November 28, 2012 5:27 PM EST
The Wall Street Journal's Chief Economics correspondent, Jon Hilsenrath, thinks the Fed is likely to continue buying long-term mortgage-back Treasury bonds in 2013. Hilsenrath moved markets this summer when he wrote an article predicting Fed QE3 at a time when many Fed watchers where still talking Twist, so his opinion on the topic is worth noting.

In his article, Hilsenrath pointed out that Fed Chairman Ben Bernanke said the agency planned to review asset purchases at year end. For those puzzled over future Fed policy, the WSJ article makes a case for more printing, citing statements from a number of Fed officials including Dennis Lockhart and John Williams.

Regarding operation Twist, Hilsenrath thinks the Fed has a slightly tougher decision, but once again citing Fed comments, he thinks an abrupt end to the plan is unlikely.

"It is possible that Fed officials might deviate in size from the $45 billion in monthly Treasury purchases—and $85 billion in all when mortgage securities are counted—but a large deviation from that amount looks unlikely," wrote Hilsenrath.

Hilsenrath says the Fed is considering altering their communication strategy and have been debating ways to achieve this. Proposals may include targeted unemployment and inflation rates, which could be announced in December.

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