The program will be open ended; the aggressiveness will depend on the rate of economic improvement and recovery. The Fed will also continue Operation Twist, buying longer term bonds in an effort to lower long term interest rates.
The combination of the new mortgage buying program and Operation Twist will add around $85 billion to the Fed’s balance sheet every month which is currently at $2.8 billion.
The FOMC will closely monitor the effects of each month’s asset purchases, and will make adjustments accordingly. The Committee also anticipates that exceptionally low fed funds rates will likely be warranted at least through mid-2015.
The FOMC forecasts and press conference is scheduled for today at 2:15pm ET where the Fed will release its growth forecasts.
James Ramelli B.S. in Finance from UIUC. Email: james@keeneonthemarket.com Follow: @Jim_KOTM