USA: The Fed’s sale of MBS could be an option in the future – Williams | Photo credits: Istock
May 16 (Reuters) – John Williams, the chairman of the New York Federal Reserve, said on Monday that the sale of mortgage-backed securities (MBS) could be an option the U.S. central bank could consider with a view to favoring Treasury bonds in the composition of its balance sheet.
John Williams clarified that the sale of MBS was not on the agenda for the first stages of the Fed’s balance sheet reduction plan.
The central bank announced at the beginning of the month that it would begin in June to reduce its balance sheet, which amounts to nearly 9,000 billion dollars (8,530 billion euros) due to the massive purchases of bonds carried out in recent years to maintain low rates and support the economy.
This reduction in the balance sheet will be capped at 47.5 billion dollars per month in June, July and August, then from September at 95 billion per month (60 billion in Treasuries and 35 billion in MBS).
(Report Dan Burns, French version Laetitia Volga, edited by Kate Entringer)