Fed Assets Fall to $2.3 Trillion as Mortgage Debt Declines
The Federal Reserve’s total assets fell 0.4 percent to $2.3 trillion during the past week on a decline in its holdings of mortgage-backed securities and federal agency debt.
The central bank’s balance sheet decreased by $9.75 billion in the week ended yesterday, according to a weekly release today. The Fed’s holdings of mortgage-backed securities declined by $10.9 billion to $1.09 trillion, while its federal agency securities shrank by $1.98 billion to $154.5 billion.
The Fed said last month that as housing debt matures it will purchase new Treasury securities to maintain its total securities holdings at $2.05 trillion. The plan is aimed at preventing money from being drained out of the financial system.
The central bank has purchased $22.9 billion of Treasuries since it began the program on Aug. 17. The Fed’s holdings of Treasury securities increased by $4.75 billion to $794.6 billion in the past week.
M2 money supply rose by $11.1 billion in the week ended Aug. 23, the Fed said. That left M2 growing at an annual rate of 2.3 percent for the past 52 weeks, below the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.
The Fed reports two measures of the money supply each week. M1 includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks. M2, the more widely followed, adds savings and private holdings in money market mutual funds.
For the latest reporting week, M1 fell by $7.5 billion, and over the past 52 weeks M1 increased 5 percent, according to the central bank. The Fed no longer publishes figures for M3.
To contact the reporter on this story: Joshua Zumbrun in Washington at jzumbrun@bloomberg.net.
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