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Fed's Balance Sheet Declines in Latest Week

Date : 12/27/2012 @ 5:00PM
Source : Dow Jones News

Fed's Balance Sheet Declines in Latest Week

   By Kristina Peterson and Sarah Portlock 
 

WASHINGTON--The U.S. Federal Reserve's balance sheet declined over the past week, as the central bank continued with its easy-money policy.

The Fed's asset holdings in the week ended Dec. 26 decreased to $2.909 trillion, down from $2.922 trillion a week earlier, it said in a weekly report released Thursday.

The Fed's holdings of U.S. Treasury securities edged down to $1.657 trillion on Wednesday from $1.659 trillion a week earlier. The central bank's holdings of mortgage-backed securities fell to $926.56 billion from $933.39 billion a week ago.

The Fed's portfolio has tripled since the financial crisis of 2008 and 2009 as the central bank bought government bonds and mortgage-backed securities in an effort to keep interest rates low and to stimulate the economy.

In September the Fed began buying $40 billion a month of additional mortgage-backed securities on an open-ended basis. Fed officials reiterated earlier this month that they plan to continue buying mortgage bonds, as well as $45 billion of long-term Treasurys each month, until the labor market improves significantly.

Thursday's report showed total borrowing from the Fed's discount lending window was $613 million Wednesday, down from $864 million a week earlier.

Commercial banks borrowed $26 million Wednesday, down from $34 million a week earlier.

U.S. government securities held in custody on behalf of foreign official accounts rose to $3.238 trillion, up from $3.234 trillion in the previous week.

U.S. Treasurys held in custody on behalf of foreign official accounts increased to $2.891 trillion, up from $2.883 trillion in the previous week.

Holdings of agency securities fell to $311.05 billion, down from the prior week's $315.20 billion.

Further data on the Fed's balance sheet, including a breakdown of district-by-district discount window borrowing, can be found at http://federalreserve.gov/releases/h41/current/h41.pdf.

Write to Kristina Peterson at kristina.peterson@dowjones.com and Sarah Portlock at sarah.portlock@dowjones.com



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