"If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse and the Fed feels like it needs to move"
- Nathan Sheets, Citigroup Inc.
Fed policymakers might potentially launch another round of Operation Twist rather than a direct asset purchases in case of increased risks or further weakening of the US economy. On April 25 Ben Bernanke announced he was ready to implement further actions for economy's stimulation in case of such necessity. However, the Fed head does not see any need for immediate actions right now.
The principle of Operation Twist is purchases of long-term government debt amid sale of short-term debt, thus keeping the balance sheet unchanged. On the other hand, the asset purchase program increased Fed's balance sheet by nearly USD 3 T, and caused the strongest political opposition versus the Fed in the last 30 years.
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