Fed Balance Sheet Rises by $908 Million on Treasuries Purchases

The Federal Reserve’s balance sheet rose $908 million to $2.35 trillion as the central bank increased its holdings of Treasury securities.

Treasuries held by the Fed increased by $16.2 billion to $917.5 billion as of Dec. 1, according to a weekly release today, while mortgage-backed securities on the balance sheet fell by $15.2 billion to $1.02 trillion and federal agency debt securities were unchanged.

The Fed today bought $8.309 billion of Treasuries as part of plan to purchase $600 billion of government debt through June 2011 and to reinvest maturing mortgage holdings. The second round of unconventional monetary easing is aimed at spurring economic growth and preventing inflation from falling too low.

M2 money supply rose by $10.3 billion in the week ended Nov. 22, the Fed said. That left M2 growing at an annual rate of 3.1 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 rose by $18.3 billion, and over the past 52 weeks M1 rose 6.9 percent, according to the central bank. The Fed no longer publishes figures for M3.

To contact the reporter on this story: James Tyson in Washington at jtyson@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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