At its latest meeting, the Fed said it will extend Operation Twist, which is selling short-term bonds and using the money to buy long-term bonds. It’s a handy way to push down long-term interest rates without printing money. There was no mention of buying more bonds, nor did it say that it expects to keep rates low for longer. Inflation projections for the central bank’s key economic variables through 2014 don’t go above 2.0%. This essentially puts a speed limit on the recovery. If the economy did pick up, and inflation looks like it will go above 2.0%, the Fed is indicating that it could very well raise rates—even if unemployment is still high.
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The Fed keeps slouching towards oblivion (Atlantic)
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