Fed discussed providing more accommodation by changing Treasury buying to keep longer-term rates down

Federal Reserve officials held a detailed discussion about their asset purchase program during a meeting earlier this month, with some members saying they hope to implement several changes.

The Fed on Wednesday Issued minutes from 4-5 policy meeting. At that meeting, officials voted to keep benchmark short-term lending rates near zero.

Market participants were looking for minutes to gauge where policymakers likely stand to improve or adjust the asset purchase program, with the Fed currently buying $ 120 billion of treasury and mortgage-backed securities a month is. The Fed may choose to increase purchases or lengthen the duration of those bonds.

While members said that the current pace of procurement was helping to keep the financial conditions in order, they noted that changes could be made if necessary.

“Participants stated that the committee could provide more housing when appropriate, by shifting its treasury purchases to people with greater maturity without increasing the speed of purchase or increasing the size of their purchases.” “Alternatively, the committee may provide greater scope, if appropriate, by conducting the procurement of a similar motion and structure on the same horizon.”

Officials of the Federal Open Market Committee also expressed concern about the pace of economic recovery, noting that growth was still at a good pace before the coronovirus epidemic hit March.

Fed Post chairman Jerome Powell said he thinks the Fed still has a lot of policy “ammunition” and added that the committee is “strongly committed to using these powerful tools to support the economy” is.”

Since then, the Fed has learned that it begins 2021 without some weapons in its arsenal, as Treasury Secretary Steven Menuchin has directed the central bank to return collateral funds received for several epidemic-era lending programs . These include corporate bond purchases, loans to state and municipal governments, and the Main Street Lending Program for small and medium-sized businesses.

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