Overview
Recent Developments
The Overview section of this report highlights recent developments in the operations of the Federal Reserve's monetary policy tools and presents data describing changes in the assets, liabilities, and total capital of the Federal Reserve System as of February 28, 2018.
FOMC Raises Target Range for the Federal Funds Rate; Federal Reserve Takes Associated and Related Implementation Steps
- On December 13, 2017, the Federal Open Market Committee (FOMC) announced that it had decided to raise the target range for the federal funds rate to 1-1/4 to 1-1/2 percent, from 1 to
1-1/4 percent. Additional information on the FOMC's decision is available at www.federalreserve.gov/newsevents/press/monetary/20171213a.htm and www.federalreserve.gov/monetarypolicy/fomcminutes20171213.htm. - To implement this monetary policy stance, the FOMC directed the Federal Reserve Bank of New York (FRBNY) to conduct open market operations (OMOs), including overnight reverse repurchase operations, as necessary to maintain the federal funds rate in a target range of 1-1/4 to
1-1/2 percent. In related actions, effective December 14, 2017, the Board of Governors of the Federal Reserve System (Board) raised the interest rate paid on required and excess reserve balances to 1.50 percent and approved a 1/4 percentage point increase in the discount rate (the primary credit rate) to 2.00 percent. - In addition, the FOMC directed the FRBNY to continue rolling over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during December that exceeded $6 billion and to continue reinvesting in agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve's holdings of agency debt and agency MBS received during December that exceeded $4 billion. Effective in January 2018, the FOMC directed the FRBNY to increase these principal payment reinvestment thresholds to $12 billion per calendar month for Treasury securities and $8 billion per calendar month for agency debt and agency MBS. Small deviations from these amounts for operational reasons are acceptable. Additional information on these implementation steps is available at www.federalreserve.gov/newsevents/pressreleases/monetary20171213a1.htm and www.newyorkfed.org/markets/rrp_op_policies.html.
Federal Reserve Reduces Aggregate Surplus in Accordance with Legislation
- The Bipartisan Budget Act of 2018 (Budget Act), which was enacted on February 9, 2018, reduced the statutory limit on aggregate Federal Reserve Bank capital surplus from $10 billion to $7.5 billion. Any amount of aggregate Federal Reserve Bank capital surplus that exceeds this limit will be remitted to the U.S. Treasury. Accordingly, on February 22, 2018, the Reserve Banks provided a $2.5 billion remittance to the U.S. Treasury in order to reduce this surplus to the Budget Act limit.
Federal Reserve Board Publishes Annual Financial Statements
- On March 23, 2018, the Federal Reserve System released the 2017 audited financial statements for the combined Federal Reserve Banks, the 12 individual Reserve Banks, and the Board. Additional information can be found in the section of the report entitled "Federal Reserve Bank's Financial Information." The Federal Reserve System financial statements are available on the Board's website at www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm.
Federal Reserve System Selected Assets, Liabilities, and Total Capital
Table 1 reports selected assets, liabilities, and total capital of the Federal Reserve System and presents the change in these components over selected intervals. The Federal Reserve publishes its complete balance sheet each week in the H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," available at www.federalreserve.gov/releases/h41/.
Figure 1 displays the levels of selected Federal Reserve assets and liabilities, securities holdings, and credit extended through liquidity facilities since April 2010.
Table 1. Assets, liabilities, and capital of the Federal Reserve System
Billions of dollars
| Item | Current February 28, 2018 |
Change from October 25, 2017 |
Change from March 1, 2017 |
|---|---|---|---|
| Total assets | 4,393 | -68 | -65 |
| Selected assets | |||
| Securities held outright | 4,189 | -54 | -51 |
| U.S. Treasury securities 1 | 2,424 | -41 | -39 |
| Federal agency debt securities 1 | 4 | -2 | -9 |
| Mortgage-backed securities2 | 1,760 | -11 | -3 |
| Memo: Overnight securities lending3 | 26 | 1 | 3 |
| Memo: Net commitments to purchase mortgage-backed securities4 | 14 | -4 | -12 |
| Unamortized premiums on securities held outright5 | 156 | -5 | -14 |
| Unamortized discounts on securities held outright 5 | -14 | +* | 1 |
| Lending to depository institutions6 | * | -* | +* |
| Central bank liquidity swaps7 | * | +* | -1 |
| Net portfolio holdings of Maiden Lane LLC 8 | 2 | -* | +* |
| Foreign currency denominated assets 9 | 22 | 1 | 2 |
| Total liabilities | 4,354 | -66 | -63 |
| Selected liabilities | |||
| Federal Reserve notes in circulation | 1,580 | 43 | 105 |
| Reverse repurchase agreements 10 | 277 | -70 | -127 |
| Foreign official and international accounts 10 | 233 | -3 | -16 |
| Others 10 | 45 | -68 | -111 |
| Term deposits held by depository institutions | 0 | -14 | -17 |
| Other deposits held by depository institutions | 2,208 | -33 | -100 |
| U.S. Treasury, General Account | 199 | 14 | 51 |
| Other deposits 11 | 77 | -5 | 25 |
| Total capital | 39 | -2 | -1 |
Note: Unaudited. Components may not sum to totals because of rounding.
* Less than $500 million.
1. Face value. Return to table
2. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The current face value shown is the remaining principal balance of the securities. Return to table
3. Securities loans under the overnight facility are off-balance-sheet transactions. These loans are shown here as a memo item to indicate the portion of securities held outright that have been lent through this program. Return to table
4. Current face value. Includes commitments associated with outright purchases, dollar rolls, and coupon swaps. Return to table
5. Reflects the premium or discount, which is the difference between the purchase price and the face value of the securities that has not been amortized. For U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities, amortization is on an effective-interest basis. Return to table
6. Total of primary, secondary, and seasonal credit. Return to table
7. Dollar value of the foreign currency held under these agreements valued at the exchange rate to be used when the foreign currency is returned to the foreign central bank. This exchange rate equals the market exchange rate used when the foreign currency was acquired from the foreign central bank. Return to table
8. Fair value. Fair value reflects an estimate of the price that would be received upon selling an asset if the transaction were to be conducted in an orderly market on the measurement date. Assets are revalued quarterly. Return to table
9. Revalued daily at current foreign currency exchange rates. Return to table
10. Cash value of agreements, which are collateralized by U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities. Return to table
11. Includes deposits held at the Reserve Banks by international and multilateral organizations, government-sponsored enterprises, and designated financial market utilities. Also includes certain deposit accounts other than the U.S. Treasury, General Account, for services provided by the Reserve Banks as fiscal agents of the United States. Return to table
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