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118 posts on "Monetary Policy"

July 11, 2017

How the Fed Changes the Size of Its Balance Sheet: The Case of Mortgage-Backed Securities



LSE_2017_How the Fed Changes the Size of Its Balance Sheet: The Case of Mortgage-Backed Securities

In our previous post, we considered balance sheet mechanics related to the Federal Reserve’s purchase and redemption of Treasury securities. These mechanics are fairly straightforward and help to illustrate the basic relationships among actors in the financial system. Here, we turn to transactions involving agency mortgage-backed securities (MBS), which are somewhat more complicated. We focus particularly on what happens when households pay down their mortgages, either through regular monthly amortizations or a large payment covering some or all of the outstanding balance, as might occur with a refinancing.

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Posted by Blog Author at 7:00 AM in Central Bank, Federal Reserve, Monetary Policy | Permalink | Comments (1)

July 10, 2017

Just Released: Updated SOMA Portfolio and Income Projections



LSE_2017_Updated SOMA Portfolio and Income Projections

The Federal Reserve Bank of New York’s Markets Group today published a report presenting updated staff projections for the future path of domestic securities held in the System Open Market Account (SOMA) and portfolio-related income. The updated projections incorporate very recent information and are provided as a tool for the public to further understand factors affecting the evolution of the Federal Reserve’s balance sheet.

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Posted by Blog Author at 10:00 AM in Federal Reserve, Monetary Policy | Permalink | Comments (0)

How the Fed Changes the Size of Its Balance Sheet



LSE_2017_How the Fed Changes the Size of Its Balance Sheet

The size of the Federal Reserve’s balance sheet increased greatly between 2009 and 2014 owing to large-scale asset purchases. The balance sheet has stayed at a high level since then through the ongoing reinvestment of principal repayments on securities that the Fed holds. When the Federal Open Market Committee (FOMC) decides to reduce the size of the Fed’s balance sheet, it is expected to do so by gradually reducing the pace of reinvestments, as outlined in the June 2017 addendum to the FOMC’s Policy Normalization Principles and Plans. How do asset purchases increase the size of the Fed’s balance sheet? And how would reducing reinvestments reduce the size of the balance sheet? In this post, we answer these questions by describing the mechanics of the Fed’s balance sheet. In our next post, we will describe the balance sheet mechanics with respect to agency mortgage-backed securities (MBS).

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Posted by Blog Author at 7:00 AM in Central Bank, Federal Reserve, Monetary Policy | Permalink | Comments (4)

May 31, 2017

The New York Fed DSGE Model Forecast—May 2017



This post presents our quarterly update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since February 2017. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE Model Q & A.

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Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (0)

March 29, 2017

QE Frictions: Could Banks Have Favored Refinancing over New Purchase Borrowing?



LSE_QE Frictions: Could Banks Have Favored Refinancing over New Purchase Borrowing?

Quantitative easing (QE)—the Federal Reserve’s effort to provide policy accommodation lowering long-term interest rates at a time when the federal funds rate was near its lower bound—has generated a great deal of research, both about its impact and about the frictions that might limit that impact. For example, this recent study finds that weak competition in local mortgage markets limited the pass-through from QE to mortgage rates for borrowers, and another study suggests that QE expanded banks’ mortgage lending while crowding out their commercial lending. In this post, we look into a different friction—whether banks’ limited risk-taking capacity after the crisis led them to favor refinance mortgages over new mortgage originations.

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Posted by Blog Author at 7:00 AM in Financial Institutions, Housing, Monetary Policy | Permalink | Comments (2)

February 17, 2017

The FRBNY DSGE Model Forecast—February 2017



This post presents the latest update of the economic forecasts generated by the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model. We introduced this model in a series of blog posts in September 2014 and published forecasts twice a year thereafter. With this post, we move to a quarterly release schedule, and highlight how our forecasts have changed since November 2016.

Continue reading "The FRBNY DSGE Model Forecast—February 2017" »

Posted by Blog Author at 7:00 AM in Forecasting, Macroecon, Monetary Policy | Permalink | Comments (0)

December 21, 2016

Hey, Economist! Tobias Adrian Reflects on His Work at the N.Y. Fed before Heading to the IMF

LSE_Hey, Economist! Tobias Adrian Reflects on His Work at the N.Y. Fed before Heading to the IMF

Tobias Adrian is leaving the New York Fed to become the Financial Counselor and Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF). In announcing Adrian’s appointment, Christine Lagarde, managing director of the IMF, described Tobias as “internationally highly regarded for his insightful analytical work.” Until he starts his new position at the beginning of 2017, Adrian will be winding down his service as Senior Vice President of the New York Fed and Associate Director of the Bank’s Research and Statistics Group. Before he moves on to the IMF, Adrian shared some insight on his time at the Bank.

Continue reading "Hey, Economist! Tobias Adrian Reflects on His Work at the N.Y. Fed before Heading to the IMF" »

Posted by Blog Author at 7:00 AM in Hey, Economist!, Monetary Policy | Permalink | Comments (2)

December 20, 2016

At the N.Y. Fed: Capital Flows, Policy Dilemmas, and the Future of Global Financial Integration



LSE_At the N.Y. Fed: Capital Flows, Policy Dilemmas, and the Future of Global Financial Integration

The New York Fed recently hosted the third biannual Global Research Forum on International Macroeconomics and Finance, an event organized in conjunction with the European Central Bank (ECB) and the Federal Reserve Board. Bringing together a diverse group of academics, policymakers, and market participants, the two-day conference (November 17-18) was aimed at promoting discussion of frontier research on empirical and theoretical issues in international finance, banking, and open-economy macroeconomics. Understanding the drivers and implications of international capital flows was a major area of focus, along with the policy challenges posed by global financial integration.

Continue reading "At the N.Y. Fed: Capital Flows, Policy Dilemmas, and the Future of Global Financial Integration" »

November 21, 2016

The FRBNY DSGE Model Forecast—November 2016



This post presents the latest update of the economic forecasts generated by the Federal Reserve Bank of New York’s (FRBNY) dynamic stochastic general equilibrium (DSGE) model. We introduced this model in a series of blog posts in September 2014 and have since published forecasts twice a year. Here we describe our current forecast and highlight how it has changed since May 2016.

Continue reading "The FRBNY DSGE Model Forecast—November 2016" »

Posted by Blog Author at 7:00 AM in DSGE, Expectations, Forecasting, Macroecon, Monetary Policy | Permalink | Comments (2)

November 18, 2016

Just Released: Press Briefing on the Survey of Consumer Expectations



LSE_Just Released: Press Briefing on the Survey of Consumer Expectations

The New York Fed’s Survey of Consumer Expectations (SCE) collects information on household heads’ economic expectations and behavior. In particular, the survey covers respondents’ views on how inflation, spending, credit access, and the housing and labor markets will evolve over time. The SCE yields important insights that inform our monetary policy decisions. This morning, President Dudley joined New York Fed economists to brief the press on the design of the SCE and the latest releases of survey results. President Dudley introduced the briefing by speaking about the benefits of measuring consumers’ expectations.

Continue reading "Just Released: Press Briefing on the Survey of Consumer Expectations" »

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