The Federal Reserve will aim to keep the domestic securities holdings in its System Open Market Account at about $2.654 trillion, according to a statement today from the Federal Reserve Bank of New York.
The central bank is this month completing a $600 billion bond purchase-program as scheduled and will maintain its existing policy of reinvesting principal payments from its securities holdings, the policy-setting Federal Open Market Committee said today in a statement after a two-day meeting in Washington. Fed officials said they will maintain their record monetary stimulus to support a flagging economic recovery.
The Fed’s purchases “will be allocated across maturities according to a distribution that is nearly identical to that executed under the Treasury purchase program,” according to the statement from the New York Fed, the branch of the Federal Reserve System that implements monetary policy.
When the central bank announced its second round of bond purchases in November, it said it aimed to buy assets with an average duration of between five and six years, according to a Nov. 3 statement from the New York Fed.
The Open Market Trading Desk planned to make about 86 percent of its purchases in securities maturing between 2.5 years and 10 years, the statement said. Duration, a measure of a bond’s price sensitivity to interest rate changes, generally increases with maturity.
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