"Operation Twist" would represent a subtle, yet important, policy shift at the Fed.

If the Fed announces Operation Twist today (selling short dated securities and buying longer dated securities) it would represent a subtle, yet important shift in Fed policy in my opinion. It would signify that the inflation hawks on the FOMC have won the debate.

Operation Twist would be policy action that doesn't entail an expansion of the Fed's balance sheet and an expansion of the Fed's balance sheet is exactly what guys like Fisher, Plosser and Kocherlakota oppose. They believe it's inflationary and that it hurts the dollar.

So Operation Twist, if it is announced, would mean that the inflation hawks on the FOMC are in control.