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Fed's Balance Sheet Shrank in Past Week

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Thursday, June 28, 2012 4:30:58 PM
Re: None Post # of 594756 
Fed's Balance Sheet Shrank in Past Week


By Jamila Trindle and Sarah Portlock


WASHINGTON--The Federal Reserve's balance sheet shrunk over the last week
after the central bank announced plans to extend its program of lengthening the
maturities of its portfolio holdings to help stimulate the sluggish economy.

The Fed's asset holdings in the week ended June 27 were $ 2.866 trillion,
down from $2.873 trillion a week earlier, it said in a weekly report released
Thursday.

The Fed's holdings of U.S. Treasury securities grew, rising to $1.667
trillion from $1.664 trillion in the previous week. The central bank's holdings
of mortgage-backed securities fell to $854.98 billion, from $868.04 billion a
week ago.

The Fed's portfolio has tripled since the financial crisis of 2008 and 2009
as the central bank bought government bonds and mortgage-backed securities in
an effort to keep interest rates low and to stimulate the economy.

Fed officials decided last week to extend a program begun last fall to adjust
the central bank's securities portfolio to hold more long-term government debt
and mortgage bonds, a move intended to spur spending and investment by making
borrowing cheaper. The initial $400 billion program was set to expire at the
end of the month, but the Fed now plans to exchange an additional $267 billion
in short-dated notes for longer-dated ones through year-end.

Thursday's report showed total borrowing from the Fed's discount lending
window was $4.86 billion on Wednesday, down from $5.42 billion a week earlier.

Commercial banks borrowed $18 million from the discount window, down from
$106 million in the previous week.

U.S. government securities held in custody on behalf of foreign official
accounts totaled $3.505 trillion, down from $3.508 trillion in the previous
week.

U.S. Treasurys held in custody on behalf of foreign official accounts was
$2.807 trillion, a slight decrease from $2.809 trillion a week earlier.

Holdings of federal agency securities fell to $698.49 billion from $698.95
billion in the prior week.

Further data on the Fed's balance sheet, including a breakdown of
district-by-district discount window borrowing, can be found at
http://federalreserve.gov/releases/h41/current/h41.pdf.


Write to Jamila Trindle at jamila.trindle@dowjones.com and Sarah Portlock at
sarah.portlock@dowjones.com
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(END) Dow Jones Newswires

June 28, 2012 16:30 ET (20:30 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

062812 20:30 -- GMT


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