At the same meeting of the open market committee

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At the same meeting of the open market committee where it announced Quantitative Easing 3, the Fed chose to also announce that its currently low Fed funds rate of 0 to .25% would be maintained until at least the middle of 2015. Previously it had merely said that it would keep that rate low until early 2014. Why would changing investors’ expectations that the Fed would keep the overnight Fed Funds rate at its current low level for at least 18 months longer than previously promised be helpful to the Fed. (hint…think about shape of the Treasury yield curve) Explain your answer in a paragraph.

Reference no: EM131093036

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