The Federal Reserve’s Federal Open Markets Committee (FOMC), as anticipated, announced on Wednesday that it would extend the average maturity of its securities holdings. The FOMC stated it would transfer $400 billion worth of its holdings to Treasury securities with maturities from six to 30 years from Treasury securities with maturities less than three years. It will execute this move by June 2012 by buying longer dated debt while selling shorter dated debt.
While the move was anticipated, it was made more controversial after a group of Republican Congressional leaders sent a letter to Federal Reserve Board Chairman Ben Bernanke expressing their reservations over any “additional monetary stimulus proposals.”
Numerous Fed observers viewed the letter as unprecedented and a challenge to the Fed’s independence.
Here is how various markets reacted to the announcement: