Fed unveils 'QE4' as it links rates to unemployment

The central bank signalled yesterday it will keep rates anchored for as long as the unemployment rate remains above 6.5% - providing it does not expect inflation to exceed 2.5% over the subsequent 1-2 years. That guidance was accompanied by an extension of its bond-buying programme. In addition to maintaining a $40bn per month programme of mortgage-backed securities purchases, the Fed will replace the expiring 'Operation Twist' with an additional $45bn per month of US treasury purchases. Operation Twist had seen the Fed sell short-dated bonds and buy longer-dated debt in an effort to flat...