The Effect of the Federal Reserve’s Securities Holdings on Longer-term Interest Rates
Jane E. Ihrig and
FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)
In an effort to promote more accommodative financial conditions following the financial crisis of 2008 and the ensuing recession, and at a time when the conventional monetary policy tool--the federal funds rate--was at its effective lower bound, the Federal Reserve conducted large-scale asset purchases (LSAPs) and a maturity extension program (MEP). This note outlines a way to estimate by how much Federal Reserve securities holdings resulting from these purchase programs reduce longer-term interest rates. In this note, we focus on another channel through which LSAPs may affect the economy: the portfolio balance channel.
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2017-04-20-1
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