I am not going to do justice to the monumental change the Fed just instituted with the FOMC's policy statement yesterday but I am going to take a first stab at it here in this daily with a number of articles below to follow. Here's the crux of it.
The Fed has converted Operation Twist, which is now expiring into a program of outright purchases by the Fed, which means the Fed goes from changing the composition of its balance sheet to expanding its balance sheet. I addition, the Fed has changed the inflation target from below 2.o% to below 2.5%, meaning that the Fed is explicitly de-emphasising the inflation part of its mandate, in effect saying that it is willing to accept a higher level of inflation because it views its employment mandate as far more important. Finally, the Fed has switch...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.