The second program of quantitative easing was first mentioned in a speech given by Federal Reserve Chairman Bernanke in Jackson Hole in August 2010. The Fed officially announced the program on November 3, 2010. The Fed stated that it will purchase $600 billion of longer-term Treasury securities by the end of 2nd quarter of 2011, a pace of about $75 billion per month in order to promote a stronger pace of economic recovery in the United States. The Fed would also use the income from its portfolio of securities for additional purchases bring the total purchases close to $800 billion. The purchases are focused in the 5-10 year maturities.

Investing Essentials

Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Bank anticipation notes (BAN)

Notes issued by states and municipalities to obtain interim financing for projects that will eventually be funded long term through the sale of a bond issue.

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