Tags: Fed | Buys | Treasuries | Easing | Resumes

Fed Buys $7.229 Billion of Treasuries as Easing Resumes

Friday, 12 Nov 2010 12:03 PM

The Federal Reserve bought $7.229 billion of Treasuries as the central bank embarked on a second round of unconventional monetary easing to reduce unemployment and avert deflation.

Policy makers acquired 16 of the 24 securities maturing from November 2014 through April 2016 that were listed for possible purchase on the Federal Reserve Bank of New York’s website. The acquisitions are part of the Fed’s plan to acquire $600 billion of Treasuries through June and reinvest maturing mortgage holdings.

The policy-setting Federal Open Market Committee announced this round of stimulus on Nov. 3 after a benchmark interest rate near zero and an earlier program to buy $1.7 trillion of securities failed to bring down an unemployment rate that’s stuck near a 26-year high. The Fed said on Nov. 10 it will purchase $105 billion of debt over the next month.

The central bank eased a self-imposed 35 percent individual security holdings limit, allowing for increases “only in modest increments,” for the purchases.

The central bank expects to reinvest $250 billion to $300 billion of proceeds from mortgage-backed debt and agency securities into Treasuries through the end of the second half of next year. It began reinvesting the proceeds in August.

The closing time for today’s transactions was pushed back to 11:30 a.m. from 11 a.m. New York time because of a “technical issue,” according to Deborah Kilroe, a spokeswoman for the New York Fed.

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