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Fed hints at more bond buying sprees

November 14, 2012: 3:53 PM ET

Bernanke and the Federal Reserve hint at more bond buying sprees to comeNot everyone is thrilled with the Federal Reserve's loose purse strings over the past few years. With the economy now on the mend, many had hoped the massive spending sprees would finally start to wind down.

But that might not be the case. At least not yet.

Back at its September meeting, the Fed's policy making committee announced plans to launch QE3 -- a massive bond-buying program with an indefinite conclusion. As Chairman Ben Bernanke explained at his post-mortem press conference, the bond purchases – to the tune of $40 billion a month – would end only when the Fed decides the labor market had substantially improved.

What we didn't know at the time was just how the Fed would measure that improvement. Would there be an unemployment rate target? A rebound in payrolls?

Wednesday afternoon, we got a bit more clarity on the subject, when the Fed released minutes from its meeting in October. It seems Fed members are leaning toward giving people more details about how they plan to evaluate the health of the job market:

"[A] couple of participants noted the likely usefulness of clarifying the range of indicators that would be evaluated in assessing the outlook for the labor market."

So hopefully we'll hear more details on that soon.

But the minutes also signaled more bond buying to come next year. Even with QE3 left open ended, an earlier program involving bond swaps – a.k.a Operation Twist -- is scheduled to run out at the end of the year.

"Looking ahead, a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market."

So it seems like at least some Fed members still have their sights set on more bond shopping once Operation Twist expires.

  • Fed: Let's Twist again like we did last summer?

    The Federal Reserve's next policy meeting is a two-day session concluding on June 20. That's just ten days before the Fed's Operation Twist policy -- swapping short-term bonds for ones with longer duration to help keep 10-year and 30-year bond yields low -- expires. Up until recently, few expected the Fed would seriously consider extending Twist.

    But what a difference a lousy job report makes. Atlanta Fed president Dennis Lockhart, who MORE

    - Jun 6, 2012 10:18 AM ET
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Home pricesAug 28
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