The Fed's interest rate risk

Glenn Rudebusch

FRBSF Economic Letter, 2011, issue apr11

Abstract: To make financial conditions more supportive of economic growth, the Federal Reserve has purchased large amounts of longer-term securities in recent years. The Fed's resulting securities portfolio has generated substantial income but may incur financial losses when market interest rates rise. Such interest rate risk appears modest, especially relative to the Fed's policy objectives of full employment and price stability.

Keywords: Interest rates; Monetary policy (search for similar items in EconPapers)
Date: 2011
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