Dealer Survey Sees Fed Asset Purchases Reduced by January 2014

Primary dealers expected the Federal Reserve to reduce the pace of asset purchases by the beginning of 2014, with a majority anticipating an end to mortgage-bond purchases by January, a survey showed.

The median respondent in the survey by the Federal Reserve Bank of New York saw the central bank buying $20 billion in Treasuries per month and no mortgage securities in January 2014, according to the survey conducted before the Federal Open Market Committee’s Jan. 29-30 meeting.

Fed officials last month affirmed their plan to keep buying $45 billion in Treasuries and $40 billion in mortgage bonds per month, seeking to foster a faster recovery in the labor market. Several participants said the FOMC should be prepared to adjust the pace of purchases, according to minutes of the gathering released yesterday.

Bond dealers expected the Fed to keep buying the securities at the same pace through at least the April 30-May 1 meeting this year, and the median respondent said the first quarter of 2014 is the most likely time for the Fed’s round of large-scale asset purchases to end.

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