• Aug 24, 2024

Fed mortgage bond holdings play 'central' policy rule, paper says

Federal Reserve holdings of mortgage bonds play a “central” role in how monetary policy affects the economy's momentum, academics wrote in a paper to be presented at a central bank research conference Saturday. The paper takes stock of how the Fed uses increases and contractions in its holdings of Treasury and mortgage bonds to augment the changes it does with its interest rate target, actions collectively aimed to influence the economy's momentum. Known as quantitative easing, or QE, Fed purchases of Treasury and mortgage bonds starting in earnest in the spring of 2020 caused central bank holdings to more than double to a peak of around $9 trillion by the summer of 2022.