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 July 25, 2018.
FOMC Raises Target Range for the Federal Funds Rate; Federal Reserve Takes Associated and Related Implementation Steps
- On June 13, 2018, the Federal Open Market Committee (FOMC) announced that it had decided to raise the target range for the federal funds rate to 1-3/4 to 2 percent, from 1-1/2 to 1-3/4 percent. Additional information on the FOMC's decision is available at www.federalreserve.gov/newsevents/pressreleases/monetary20180613a.htm and www.federalreserve.gov/monetarypolicy/fomcminutes20180613.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 1-3/4 to 2 percent. In related actions, effective June 14, 2018, the Board of Governors of the Federal Reserve System (Board) raised the interest rate paid on required and excess reserve balances to 1.95 percent and approved a 1/4 percentage point increase in the discount rate (the primary credit rate) to 2.50 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 June that exceeded $18 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 June that exceeded $12 billion. Effective in July 2018, the FOMC directed the FRBNY to increase these principal payment reinvestment thresholds to $24 billion per calendar month for Treasury securities and $16 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/monetary20180613a1.htm and www.newyorkfed.org/markets/rrp_op_policies.html.
Federal Reserve Reduces Aggregate Surplus in Accordance with Legislation
- The Economic Growth, Regulatory Relief, and Consumer Protection Act ("act"), which was enacted on May 24, 2018, reduced the statutory limit on aggregate Federal Reserve Bank capital surplus from $7.5 billion to $6.825 billion. Any amount of aggregate Federal Reserve Bank capital surplus that exceeds this limit will be remitted to the U.S. Treasury. Accordingly, on June 21, 2018, the Reserve Banks provided a $675 million remittance to the U.S. Treasury in order to reduce this surplus to the limit in the act.
Federal Reserve Board Publishes Quarterly Financial Report
- On August 17, 2018, the Federal Reserve System published the "Federal Reserve Banks Combined Quarterly Financial Report" for the second quarter of 2018, which includes summary information on the combined financial position and results of operations of the 12 Reserve Banks. All financial information included in the report is unaudited. The report is available on the Federal Reserve Board's website at www.federalreserve.gov/aboutthefed/combined-quarterly-financial-reports-unaudited.htm.
Federal Reserve System 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 July 25, 2018 |
Change from April 25, 2018 |
Change from July 26, 2017 |
|---|---|---|---|
| Total assets | 4,278 | -95 | -188 |
| Selected assets | |||
| Securities held outright | 4,072 | -91 | -170 |
| U.S. Treasury securities 1 | 2,360 | -53 | -105 |
| Federal agency debt securities 1 | 2 | -2 | -6 |
| Mortgage-backed securities2 | 1,710 | -35 | -59 |
| Memo: Overnight securities lending3 | 18 | 1 | -4 |
| Memo: Net commitments to purchase mortgage-backed securities4 | 8 | -1 | -11 |
| Unamortized premiums on securities held outright 5 | 148 | -5 | -17 |
| Unamortized discounts on securities held outright 5 | -14 | +* | +1 |
| Lending to depository institutions6 | * | +* | +* |
| Central bank liquidity swaps7 | * | +* | +* |
| Net portfolio holdings of Maiden Lane LLC 8 | 2 | +* | +* |
| Foreign currency denominated assets 9 | 21 | -1 | +* |
| Total liabilities | 4,239 | -95 | -186 |
| Selected liabilities | |||
| Federal Reserve notes in circulation | 1,621 | 25 | 106 |
| Reverse repurchase agreements10 | 250 | 12 | -93 |
| Foreign official and international accounts 10 | 250 | 15 | 9 |
| Others 10 | 1 | -3 | -103 |
| Term deposits held by depository institutions | 0 | 0 | 0 |
| Other deposits held by depository institutions | 1,947 | -64 | -346 |
| U.S. Treasury, General Account | 339 | -64 | 155 |
| Other deposits 11 | 71 | -3 | -6 |
| Total capital | 39 | -* | -2 |
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, designated financial market utilities, and deposits held by depository institutions in joint accounts in connection with their participation in certain private-sector payment arrangements. 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
Figure 1. Credit and liquidity programs and the Federal Reserve's balance sheet
