The Federal Reserve may need to buy more government bonds than it did before the 2008 financial crisis and conduct other money-market operations to implement its current approach to managing U.S. interest rates, a top central bank official said on Wednesday.
The Fed this year decided to indefinitely manage short-term interest rates by tweaking the interest it pays banks on excess money they keep at the central bank, a process that requires the central bank to keep a larger “balance sheet” and more bank reserves on hand than it did prior to the global financial crisis.
Crisis - Fed - Holdings - Treasuries - Bank
After that crisis, the Fed bulked up its holdings by buying Treasuries using bank reserves it created. In March, Fed officials decided to stop letting those reserves and its bond holdings decline. And...
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