Fed Considers New 'Sterilized' Bond Buying Plan To Avoid Rampant Inflation
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Stocks are pushing to the highs of the day on word the Federal Reserve is considering a new "sterilized' bond buying program for further easing, if needed. This according to the Wall Street Journal's Fed insider Jon Hilsenrath.
The new program will be designed to subdue worries about future inflation. Under the approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.
The Fed will be meeting next week, altogether they will unlikely launch a new bond buying program. The Fed is keenly aware that more money printing could push commodities prices higher, including oil, in addition to stock prices, on the perception inflation is headed higher. The new approach could help calm these inflation fears.
Link to WSJ article.
The new program will be designed to subdue worries about future inflation. Under the approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.
The Fed will be meeting next week, altogether they will unlikely launch a new bond buying program. The Fed is keenly aware that more money printing could push commodities prices higher, including oil, in addition to stock prices, on the perception inflation is headed higher. The new approach could help calm these inflation fears.
Link to WSJ article.
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