The Federal Reserve will purchase $44 billion of longer-maturity Treasurys and sell the same amount of shorter-term debt in October under its monetary stimulus plan that’s become known as Operation Twist.
Purchases will begin Oct. 3 with the acquisition of $2.25 billion to $2.75 billion of Treasurys maturing between February 2036 and August 2041, according to a statement today from the Federal Reserve Bank of New York, the branch of the Federal Reserve System that implements monetary policy.
The Federal Open Market Committee said last week that it would replace $400 billion of short-term debt in its portfolio with longer-term Treasurys in an effort to further reduce borrowing costs and counter rising risks of a recession.
The Fed will buy Treasury securities 13 times a month and sell its holdings of U.S. government debt six times, the New York Fed said on Sept. 26. The Fed will sell $8 billion to $9 billion of nominal Treasurys five times a month per operation and $1 billion to $1.5 billion of TIPS, in one operation. The Fed will buy Treasurys 12 times a month and TIPS once a month.
The Fed also announced last week that it would switch the reinvestment of its holdings of maturing housing debt to mortgage-backed securities from Treasurys. The New York Fed said this week it plans to buy $10 billion of agency mortgage- backed securities between Oct. 3 and Oct. 13.
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