FED Will Buy More Than Half of All Agency MBS until Labor Markets Improve
| Date Published | 9/17/2012 |
| Author | Marja Hoek-Smit |
| Theme | |
| Country | United States |
The Federal
Open Market Committee (FOMC) of the US Federal Reserve system decided on an
aggressive increase of Federal Reserve purchases of agency mortgage-backed
securities (MBS). It also extended its forward guidance on maintenance of the
current low range of fed funds of 0% to 0.25% until mid-2015.
The FOMC
agreed on an open-ended commitment to maintain the MBS purchases at $40 billion
per month until there was a substantial improvement in labor markets. This
commitment is over and above the current policy of reinvesting principal
repayments of its existing MBS holdings.
This commitment may amount to the Fed
buying more than half of all new agency MBS issued as the table by JP Morgan
indicates.