Operation Twist shows Fed is 'out of options'

Investors have accused the Federal Reserve of ‘fiddling while Rome burns' after its latest attempt to support the US economy was followed by a brutal market sell-off.

Fidelity’s asset allocation director Trevor Greetham said last week’s Operation Twist was a disappointment and only a complete policy U-turn and more QE will prevent recession in the US and UK. “It is almost like rearranging the deck chairs on the Titanic – what will give the market a boost is if the Treasury pumps more money into the economy and inflation rises,” he said. Ariel Bezalel, manager of the £443m Jupiter Strategic Bond fund, said the Fed’s statement about a serious downturn facing the global economy was the most important aspect of Operation Twist. “This was what really...