The Fed Has Actually Decreased Its Exposure To Mortgages Since It Announced Plans To Buy More

Fed’s QE-Infinity, announced about 3 weeks ago, is meant for the Fed to purchase US$40 billion of mortgage-backed securities per month.

The New York Fed has increased its pace of purchase of mortgage-backed securities after the announcement. Remarkably, however, the total holding of mortgage-backed securities on Federal Reserve’s balance sheet is now even smaller than before QE-Infinity was announced. Similarly, the total size of Federal Reserve balance sheet (as per factors affecting reserve balances account) is also no greater than before the announcement of QE-Infinity.

It may be too early to make any conclusions from this observation. However, we find this rather interesting.

fed balance sheet

Photo: Also Sprach Analyst

Source: Federal Reserve

This article originally appeared here: Federal Reserve’s balance sheet is not expanding (yet)
Also sprach Analyst – World & China Economy, Global Finance, Real Estate

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