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Dow Jones News

   By Eric Morath and Ian Talley

WASHINGTON–The U.S. Federal Reserve’s balance sheet expanded over the past week, as the central bank continued with its easy-money policy.

The Fed’s asset holdings in the week ended Jan. 2 increased to $2.919 trillion, up from $2.909 trillion a week earlier, it said in a weekly report released Thursday.

The Fed’s holdings of U.S. Treasury securities grew to $1.666 trillion on Wednesday from $1.657 trillion a week earlier. The central bank’s holdings of mortgage-backed securities edged up to $926.69 billion from $926.56 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.

In December, Fed officials committed to buying $40 billion of mortgage-backed securities and $45 billion of long-term Treasurys each month, until the labor market improves significantly.

If the Fed buys bonds at the current pace through the end of 2013, it will be expanding its portfolio by another $1.02 trillion. Ending the program could send shockwaves through markets, which have grown accustomed to repeated Fed stimulus.

Thursday’s report showed total borrowing from the Fed’s discount lending window was $587 million Wednesday, down from $613 million a week earlier.

Commercial banks borrowed $29 million Wednesday, up from $26 million a week earlier.

U.S. government securities held in custody on behalf of foreign official accounts rose to $3.241 trillion, from $3.238 trillion in the previous week.

U.S. Treasurys held in custody on behalf of foreign official accounts increased to $2.893 trillion, up from $2.891 trillion in the previous week.

Holdings of agency securities fell to $311.24 billion, down from the prior week’s $311.05 billion.

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 Eric Morath at eric.morath@dowjones.com and Ian Talley at ian.talley@dowjones.com


(END) Dow Jones Newswires

January 03, 2013 16:45 ET (21:45 GMT)

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