Fed: Monthly Bond Purchases Will Continue
The Federal Open Market Committee will continue quantitative easing through monthly bond purchases at least until the Federal Reserve sees sufficient recovery in the housing and job markets, according to FOMC meeting minutes, HousingWire reported Feb. 20.
The announcement means that the Fed would maintain its practice of buying agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a rate of $45 billion per month.
However, some FOMC members said that the Fed should be prepared to vary the pace of purchases based on economic conditions because they fear a large portfolio of long-term assets could expose the regulatory agency to major capital losses in the future, HousingWire reported.
Other members argued that a reduction or a too-early end to bond purchases could damage economic recovery. Some said that the Fed should be prepared to hold securities longer than originally anticipated by the committee’s exit principles as a replacement for future asset purchases.
Overall, the FOMC agreed to a flexible and accommodative stance based on market conditions, HousingWire reported.