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Fed extends "Twist" program to drive rates lower
Fed extends Twist program with $267B more to drive long-term rates down, notes weaker hiring
By The Associated Press

WASHINGTON (AP) ' The Federal Reserve is extending a program intended to further lower long-term interest rates, noting hiring has weakened, consumer spending is rising more slowly and the economy needs more support.

The Fed will continue Operation Twist through the end of the year. The Fed has been selling $400 billion in short-term Treasurys since September and buying longer-term Treasurys. It says it will shift another $267 billion through December. The Fed wants to spur more borrowing, spending and growth.

But extending Operation Twist might not provide much benefit. Long-term U.S. rates have already touched record lows. Businesses and consumers who aren't borrowing now might not do so if rates slipped slightly more.

Fed officials are also reiterating their plan to keep short-term rates at record lows until at least late 2014. They also repeated a warning that Europe's financial crisis continued to pose a significant risks to the economy.

The Fed has more leeway to act because it says inflation has declined. It pointed to lower gas and oil prices.

The statement was approved on a 11-1 vote. Jeffery Lacker, president of the Richmond Regional Fed Bank, dissented for the fourth straight meeting. The statement said he opposed the continuation of Operation Twist.

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