Fed's Treasury Holdings Hit $1.02 Trillion as Total Assets Fall

Friday, 31 Dec 2010 07:09 AM

 

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The Federal Reserve’s total assets fell to $2.42 trillion in the latest week from a record $2.43 trillion the previous week as the central bank’s holdings of mortgage-backed securities fell more than the increase in its Treasury portfolio.

Mortgage-backed securities held by the Fed fell by $16.3 billion to $992.1 billion in the week ended Dec. 29. Treasuries held by the Fed increased by $8.9 billion to $1.02 trillion, according to a weekly release by the central bank today. Fed holdings of federal agency debt were unchanged at $147.5 billion.

The Fed has bought $167.9 billion in Treasuries on its way to purchasing $600 billion of government debt through June 2011. The Fed is also reinvesting the proceeds of its maturing mortgage holdings. The purchases represent the Fed’s second round of unconventional monetary easing aimed at spurring economic growth and preventing inflation from falling too low.

M2 money supply rose by $4.9 billion in the week ended Dec. 20, the Fed said. That left M2 growing at an annual rate of 3.2 percent for the past 52 weeks, below the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.

The Fed reports two measures of the money supply each week. M1 includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks. M2, the more widely followed, adds savings and private holdings in money market.

M1 rose by $13.7 billion, and over the past 52 weeks M1 has risen 7.3 percent, according to the central bank. The Fed no longer publishes figures for M3.

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