The Federal Reserve on Wednesday unveiled a long-awaited plan to stop scaling back the vast portfolio of bonds it built up to spur an economic recovery from the 2007-2009 financial crisis and recession.
WASHINGTON (Reuters) – The Federal Reserve on Wednesday unveiled a long-awaited plan to stop scaling back the vast portfolio of bonds it built up to spur an economic recovery from the 2007-2009 financial crisis and recession.
By September, the U. S. central bank said its current practice of allowing up to $50 billion of Treasuries and mortgage-backed securities (MBS) to roll off its balance sheet each month will come to an end if the economy evolves “about as expected.”
When completed the Fed would still likely have at least $3.5 trillion in bonds, more than four times the roughly $800 billion it had heading into the crisis more than a decade ago. The Fed currently holds about $3.8 trillion in bonds.
The announcement sets an end-date to a programmatic reduction in the balance sheet that got underway in the fourth quarter of 2017, when the Fed set out to retire one of the more controversial components of the tools it used to fight the crisis.
