Here’s Bloomberg:
Federal Reserve Bank of New York President John Williams said policy makers are “thinking very hard” about targeting specific yields on Treasury securities as a way of ensuring borrowing costs stay at rock-bottom levels beyond keeping the benchmark interest rate near zero.
It’s a mistake for the Fed to try to reduce long-term interest rates. In the vast majority of cases, falling long-term interest rates are associated with slower expected NGDP growth. Lower interest rates are not, by themselves, expansionary.
So why do I give one cheer for yield curve control? Two reasons:
1. The policy might fail to reduce long-term rates.
2. The technique used by the Fed is likely to be expansionary. Thus the Fed will try to reduce long-term rates by purchasing assets with newly created money. The newly created money has an expansionary effect, and if the policy is successful it will raise long-term interest rates.