Fed acts to stimulate US economy - with a Twist

The Federal Reserve will not pump extra money into the ailing US economy, but policymakers last night unveiled a new scheme which they hope will stimulate growth.

Operation Twist will see the Fed sell about $400bn (£253bn) worth of bonds maturing within three years and swap this for longer-term securities. Although it puts no new money into the economy, the Fed hopes the move will keep long-term interest rates down and boost mortgage lending and loans to businesses. It said the action was necessary amid "significant downside risks" to its economic outlook. "Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated," the Fed said in a statement. "There are significant down...