The US Fed Made A Slight Policy Shift On Its Asset Holdings As The Economy Slows
The US Federal Reserve kept its key policy rate unchanged at 0-0.25% but said that it would roll over Treasury securities and reinvest proceeds from mortgage-related securities it bought during the quantitative easing as they mature in order to maintain the same amount of assets on its balance sheet. With the move, the Fed aims at keeping its holdings at about US$2.054 trn, the amount it held on 4 August. The Fed holds US$1.4 trn in mortgage-related securities on its balance sheet. Under its previous policy, when those securities are paid off, such as when people refinance their homes, the Fed intended not to undertake any new purchases to replace them. As a result, the size of the Fed’s balance sheet was expected to shrink by $150-190bn over the coming year, due to the maturing of those securities.
Tracking The World Economy... - 11/08/2010
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