Operation Twist
A Fed tactic of selling short-term bonds and buying long-term ones to push long-term interest rates down.
In plain English
A Fed tactic of selling short-term bonds and buying long-term ones to push long-term interest rates down.
Operation Twist is a Federal Reserve manoeuvre that "twists" the yield curve. The Fed sells short-dated government debt and uses the money to buy long-dated debt. Its balance sheet stays the same size, but long-term rates, the ones that set mortgage and business-loan costs, get pushed lower.
The Fed first tried it in 1961 (named after the dance craze of the day) and dusted it off again in 2011–2012, after it had already cut short-term rates to zero.
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