Fed to Boost Operation Twist With QE3 Jolt, Bank of America Says

Federal Reserve policy makers will probably announce in September a third round of bond purchases under quantitative easing to spur U.S. economic growth, according to Bank of America Corp.

The firm estimates the Fed will buy $500 billion in securities, primarily in mortgages, Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch in New York, said yesterday at a company press conference. Policy makers last week expanded their Operation Twist effort to cap borrowing costs. The new move will come as indicators, including the so-called break-even rate between Treasury Inflation Protected Securities and nominal U.S. notes, signal lower consumer prices, she said.