Fed Uses ‘Dollar Rolls’ in Mortgage-Bond Program Shift
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The Federal Reserve Bank of New York entered into paired contracts to buy and sell mortgage securities for the first time since it began reinvesting in the debt in October, in a move that may reduce funding costs.
The so-called dollar roll transactions will “facilitate the settlement of our outstanding MBS purchases,” Jonathan Freed, a New York Fed spokesman, said in an e-mailed statement.