GRAPHIC-The U.S. Fed's QE era in charts
Sept 17 (Reuters) - The U.S. Federal Reserve's monetary policy committee kicks off a pivotal two-day meeting in Washington on Tuesday at which it is widely expected to vote to begin winding down its historic stimulus program, called quantitative easing.
The latest leg of the program, dubbed QE3, was launched a year ago and has featured the Fed buying $85 billion a month of long-term Treasuries and mortgage-backed securities. Its aim is to suppress interest rates and thus to spur private-sector borrowing and boost an economy that has grown at an anemic pace following the financial crisis and 2007-2009 recession.
The first QE effort was launched in the middle of the financial crisis in late 2008, with successive bouts beginning in 2010 and 2012.
In fact, the Fed never really paused bond buying once it started. Shortly after the end of QE1, it started using the proceeds from maturing bonds on its balance sheet to buy new securities to prevent its overall holdings from declining.
Between QE2 and QE3, the Fed retooled the composition of its balance sheet to lengthen the average maturity of its holdings in a program called Operation Twist. In swapping out shorter-dated bonds for longer-dated ones, the Fed hoped to exert further downward pressure on long-term interest rates.
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