Fed sticks to the Twist

Julian Harris
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THE FEDERAL Reserve will hold down interest rates and continue with its project dubbed “Operation Twist”, it announced last night.

Growth “strengthened somewhat in the third quarter,” it said, yet warned of “significant downside risks to the economic outlook, including strains in global financial markets.”

Three hawks who had previously dissented against Operation Twist – an easing policy which sees the Fed selling short term assets and buying long term ones instead – dropped their opposition to the Fed’s decision.

Yet there is now dissent from the dovish side of the committee, with Charles Evans calling for “additional policy accommodation”, perhaps indicating support for an extended dose of quantitative easing (QE3).

Yet private firms in the US added 110,000 jobs in October, according to a separate data release from ADP, exceeding economists’ expectations.