Federal Reserve to buy $60 billion treasury bills every month

Fed’s Plan to Buy Treasury Bills Could Be an Expensive Ordeal

Fed to begin Treasury bond purchases of about $60 billion per month

He had said previously that an easing of trade tensions could reduce risks to the economic outlook but also noted that since April U.S. trade policy has swung dramatically.

"Will conduct overnight repo operations at least through January to assure ample reserves even during spikes in demand".

Kaplan also responded to questions about the Fed's new program to buy Treasury bills, announced earlier in the day to address strains in overnight funding markets.

Some investors said the announcement is a sign that the Fed is willing to act as needed to ensure that short-term interest rates are stable. "If this proves to be insufficient they'll simply do more". But some strategists say the right level of reserves is between $1.6 trillion and $1.8 trillion.

Those bond buys, known as quantitative easing, or QE, were created to push down longer-term interest rates to spur borrowing and investment. However, the Fed reported that purchases of treasury bills would have little if any impact on the level of longer-term interest rates and broader financial conditions. The Committee will continue to monitor money market developments as it assesses the level of reserves most consistent with efficient and effective policy implementation.

The 10-year Treasury falls, pushing yield up nearly 7 basis points to 1.74%; (TLT -1.3%), (TBT +2.6%). The curve had been mostly inverted since May 22 before moving into positive territory on Friday.

On Thursday, the 10th of October 2019, the US Federal Reserve had unleashed a package of fiscal rules, first introduced during the era of great financial depression of 2007-2009, in a bid to ease capital and liquidity requirements of the local and foreign lenders.

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