The Fed today announced plans today to buy $400 billion of long-term bonds while selling short-term bonds in a 1960s-era move known as “Operation Twist.” The move is supposed to entice borrowers with cheaper business and mortgage loans, invigorating the economy in the process.
However, mortgage rates are already at a decades-low level, and banks are sitting on piles of cash, just waiting to lend. But consumers are dealing with the ramifications of a down economy
The Reserve has also announced that it will keep the Federal Fund rate between 0 and .25 percent. These rates will be held until mid 2013.
These unprecedented moves are designed to reassure markets and get the economy going again.