What is Operation Twist by the Fed?

With the objective of stimulating growth in the US economy, the Federal Reserve of the US tried to lower the long-term interest rates with the help of monetary policy known as Operation Twist. You can read about the RBI – Reserve Bank of India [UPSC Indian Economy Notes] in the given link.

In the USA, the first Operation twist was implemented in 1961 and it came to an end in 1965. It involves simultaneous sale of short term bonds and purchasing of long term bonds.

Further readings:

  1. Monetary Policy – Objectives, Roles and Instruments
  2. Open Market Operation (OMO) – Two Kinds, REPO and PEMO

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