As the United States government goes deeper into debt, the Federal Reserve is monetizing the red ink.
This week, the U.S. central bank is widely expected to ramp up its purchases of long-dated Treasury bonds after it confirmed last week that it would let inflation run higher than the two percent target rate.
The Fed could announce during its mid-September Federal Open Market Committee (FOMC) policy meeting that it plans to scoop up longer-dated debt, which would be ahead of schedule.
Until then, the Fed could escalate everything it has done for the last six months. Since the COVID-19 pandemic, the Eccles Building has bought approximately $2 trillion in U.S. bonds, increasing its overall holdings to more than $4.3 trillion.
The 30-year Treasury did rise to a two-month high on Friday, but it pared some of its gains by three basis points to 1.463 percent.
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