WASHINGTON (Reuters) - Philadelphia Federal Reserve Bank President Charles Plosser said on Thursday that he was “dubious” about the benefits of replacing Operation Twist when it expires at the end of 2012.
Plosser said it was wrong to simply think that the end of Twist - under which the Fed sells short-dated Treasury bonds to buy longer-dated ones - would imply a tightening in U.S. monetary policy if it was not replaced.
“Operation Twist is not increasing the balance sheet,” he told reporters after delivering a speech at the Cato Institute. “You cannot just say ... that is going to be a tightening.”
Reporting by Alister Bull; Editing by Sandra Maler