By Nick Timiraos 

The Federal Reserve will continue its aggressive purchases of Treasury and mortgage-backed securities next week, very slowly lowering its unprecedented buying of government debt.

The central bank said Friday it would buy $345 billion in Treasury securities next week, down from $375 billion this week but up from $250 billion last week. It will buy $200 billion in mortgage-backed securities, down from $250 billion this week but up from $67 billion last week.

The Fed announced plans to purchase at least $700 billion in government debt and mortgage-backed securities on March 15, then dramatically ramped up its purchases to dislodge unusual trading conditions in critical financing markets that reflected a rush for cash by investors.

On Monday, the Fed clarified that these purchases would be open-ended.

On Friday, the Fed laid out how it would make next week's scheduled purchases. The central bank will buy $75 billion a day in Treasurys through Wednesday, then $60 billion a day on Thursday and Friday. It will buy $40 billion in mortgage securities per day.

The purchases are huge. The Fed will be buying more each day next week than it did a month during its most recent round of bond purchases, which it launched in September 2012 and ended two years later. For more than one year, the Fed was buying $85 billion in securities a month.

The Fed has greatly expanded its balance sheet to arrest strains across financial markets amid the novel coronavirus pandemic. Its holdings swelled by $942 billion over the two weeks ended Wednesday, bringing its total assets to $5.25 trillion, a record.

"The Fed is winning back control of the Treasury market where trading conditions have improved very substantially in recent days with much reduced price dislocations and [mortgage] market functioning has also improved notably," said analysts at Evercore ISI in a client note on Friday. "It is buying at such a rapid pace it has to be careful not to oversteer and distort markets in a new direction."

Write to Nick Timiraos at nick.timiraos@wsj.com

(END) Dow Jones Newswires

March 27, 2020 18:19 ET (22:19 GMT)