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 October 23, 2019.
Federal Reserve Begins Conducting Repurchase Agreement Operations
- On September 17, 2019, the Federal Reserve Bank of New York (FRBNY) began conducting overnight repurchase agreement operations (RPs or repos) in accordance with its direction from the Federal Open Market Committee (FOMC) to maintain the federal funds rate within the FOMC's target range. Subsequently, on September 24, 2019, the FRBNY began conducting term repurchase operations for terms of up to 14 days. Additional information is available at https://www.newyorkfed.org/markets/opolicy/operating_policy_190917, and https://www.newyorkfed.org/markets/opolicy/operating_policy_190920.
FOMC Changes Target Range for the Federal Funds Rate to 1-3/4 to 2 percent; Federal Reserve Announces Associated and Related Implementation Steps
- On September 18, 2019, the FOMC announced that it had decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent, from 2 to 2-1/4 percent. Additional information on the FOMC's decision is available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20190918a.htm.
- To implement its monetary policy stance, the FOMC directed the FRBNY to conduct open market operations (OMOs) as necessary to maintain the federal funds rate in its target range. In a related action, effective September 19, 2019, the Board of Governors of the Federal Reserve System (Board) lowered the interest rate paid on required and excess reserve balances to 1.80 percent. The Board also approved a 1/4 percentage point decrease in the discount rate (the primary credit rate) to 2.50 percent. Additional information is available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20190918a1.htm.
- In addition, the FOMC directed the FRBNY to continue rolling over at auction all principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month, and reinvesting all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities (MBS) received during each calendar month. Small deviations from these amounts for operational reasons are acceptable.
Federal Reserve Takes Steps to Ensure Supply of Reserves Remains Ample
- On October 11, 2019, the FOMC announced that it directed the FRBNY to purchase Treasury bills for the System Open Market Account (SOMA) at least into the second quarter of 2020 to ensure that the supply of reserves remains ample over time in light of recent and expected increases in the Federal Reserve's non-reserve liabilities. In addition, the FOMC directed the FRBNY to conduct overnight and term repurchase agreement operations at least through January 2020 to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect monetary policy implementation. These actions are purely technical measures to support the effective implementation of the FOMC's monetary policy, and do not represent a change in the stance of monetary policy. Additional information is available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20191011a.htm, https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20191011a2.pdf, https://www.newyorkfed.org/markets/opolicy/operating_policy_191011, https://www.newyorkfed.org/markets/repo-agreement-ops-faq, and https://www.newyorkfed.org/markets/repo-agreement-ops-faq.
FOMC Changes Target Range for the Federal Funds Rate to 1-1/2 to 1-3/4 percent; Federal Reserve Announces Associated and Related Implementation Steps
- On October 30, 2019, the FOMC announced that it had decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent, from 1-3/4 to 2 percent. Additional information on the FOMC's decision is available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20191030a.htm.
- To implement its monetary policy stance, the FOMC directed the FRBNY to conduct OMOs as necessary to maintain the federal funds rate in its target range. In related actions, effective October 31, 2019, the Board lowered the interest rate paid on required and excess reserve balances to 1.55 percent and approved a 1/4 percentage point decrease in the discount rate to 2.25 percent. Additional information is available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20191030a1.htm.
- In addition, the FOMC directed the FRBNY to continue rolling over at auction all principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month, and reinvesting all principal payments from the Federal Reserve's holdings of agency debt and agency MBS received during each calendar month. Small deviations from these amounts for operational reasons are acceptable.
Federal Reserve Board Publishes Quarterly Financial Report
On November 18, 2019, the Federal Reserve System published the "Federal Reserve Banks Combined Quarterly Financial Report" for the third quarter of 2019, 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 https://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 https://www.federalreserve.gov/releases/h41/.
Table 1. Assets, liabilities, and capital of the Federal Reserve System
Billions of dollars
| Item | Current October 23, 2019 |
Change from July 24, 2019 |
Change from October 24, 2018 |
|---|---|---|---|
| Total assets | 3,969 | +165 | –204 |
| Selected assets | |||
| Securities held outright | 3,609 | –8 | –364 |
| U.S. Treasury securities 1 | 2,149 | +55 | –145 |
| Federal agency debt securities 1 | 2 | 0 | –* |
| Mortgage-backed securities2 | 1,458 | –64 | –219 |
| Memo: Overnight securities lending3 | 22 | –4 | +6 |
| Memo: Net commitments to purchase mortgage-backed securities 4 | 6 | +3 | +3 |
| Unamortized premiums on securities held outright5 | 127 | –3 | –17 |
| Unamortized discounts on securities held outright 5 | –13 | +* | +1 |
| Repurchase agreements 6 | 178 | +178 | +178 |
| Lending to depository institutions 7 | * | –* | –* |
| Central bank liquidity swaps8 | * | +* | –* |
| Net portfolio holdings of Maiden Lane LLC9 | * | –* | –* |
| Foreign currency denominated assets 10 | 21 | –* | –* |
| Total liabilities | 3,929 | +165 | –205 |
| Selected liabilities | |||
| Federal Reserve notes in circulation | 1,725 | +27 | +82 |
| Reverse repurchase agreements 11 | 306 | +24 | +80 |
| Foreign official and international accounts 11 | 288 | +14 | +68 |
| Others 11 | 18 | +10 | +12 |
| Term deposits held by depository institutions | 0 | 0 | 0 |
| Other deposits held by depository institutions | 1,452 | –74 | –373 |
| U.S. Treasury, General Account | 375 | +197 | +14 |
| Other deposits 12 | 60 | –9 | –8 |
| Total capital | 39 | +* | +* |
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. Cash value of agreements. Return to table
7. Total of primary, secondary, and seasonal credit. Return to table
8. 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
9. 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
10. Revalued daily at current foreign currency exchange rates. Return to table
11. Cash value of agreements, which are collateralized by U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities. Return to table
12. 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 displays the levels of selected Federal Reserve assets and liabilities, securities holdings, and credit extended through liquidity facilities since April 2010.
Figure 1. Credit and liquidity programs and the Federal Reserve's balance sheet
