New York Fed to reinvest principal payments from agencies into Treasuries, keeping holdings constant

By Angela McDaniels

Tacoma, Wash., Aug. 10 - The Federal Reserve Bank of New York plans to keep its holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasuries, according to a statement.

Outright holdings of domestic securities in the System Open Market Account totaled $2.05 trillion as of Aug. 4. The New York Fed's Open Market Trading Desk will seek to maintain the principal amount of holdings in the account at approximately this level.

The Federal Open Market Committee made the decision to keep the level of the securities constant on Tuesday.

The first tentative schedule of purchases and the anticipated total amount of purchases to be made through the middle of September will be published Wednesday. The amount of purchases will be calibrated to offset the amount of principal payments from agency debt and agency mortgage-backed securities that the New York Fed expects to receive over that period.

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