From Bloomberg:
The Federal Reserve will start purchasing long-term Treasuries tomorrow, aiming to bring down borrowing costs by employing tools last used in the 1960s.
The first operation in the $300 billion effort is aimed at notes maturing from February 2016 to February 2019, the New York Fed Bank said in a statement today. In the coming nine days, the central bank plans to buy debt maturing between March 2011 and February 2039, according to the tentative schedule...
“Over the short-term, the Fed purchases of Treasuries will lower rates, but the need to issue over $2 trillion in securities over the next 18 months will make this less than effective,” said Mark MacQueen...
The strategy carries risks of faster inflation, though, he said. “In the long run, I’m afraid they’re simply monetizing the debt and that we’re going to end up getting inflation down the road,” Mueller said...
The central bank’s latest efforts may help swell its balance sheet to more than $4 trillion this year.
