Thread: Federal Reserve Sends $79.6 Billion in Profit to Treasury

11:34 am
Mar 14, 2014

Fed Sends $79.6 Billion in Profit to Treasury

• By
• Pedro Nicolaci da Costa

The Federal Reserve‘s balance sheet grew to $4 trillion at the end of last year, and the larger securities holdings earned it enough interest to remit $79.6 billion to the U.S. Treasury.

The central bank’s asset holdings rose by $1.1 trillion last year, financial statements released Friday show, as it embarked on its third major bond-buying program, aimed at supporting a weak economic recovery. The Fed’s interest income on its holdings rose $9.9 billion over the course of the year to $90.4 billion.

Some economists, including within the Fed, worry a large balance sheet, now some four times its precrisis size, could it make it harder for the central bank to tighten monetary policy when it decides the time is right.

But Fed Chairwoman Janet Yellen and other top Fed officials have repeatedly argued they have the tools needed to withdraw liquidity from the financial system in a timely manner.

The Fed in December said it would trim its monthly bond buys by $10 billion to $75 billion, suggesting it would likely pare them by $10 billion at coming policy meetings and end the program later this year if the economy improved as expected.

In January, the central bank said it would cut the purchases to $65 billion and is expected to lower them next week to $55 billion. The program is aimed at lowering long-term interest rates to boost growth and lower unemployment .

http://blogs.wsj.com/economics/2014/...LE_Video_Third

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