Presentation Materials (PDF)

Pages 244 to 290 of the Transcript

Appendix 1: Materials used by Mr. Carpenter and Ms. Ezer

Material for Briefing on
Potential Effects of a Large-Scale Asset-Purchase Program

Seth B. Carpenter
Michelle Ezer
September 12, 2012

Class I FOMC - Restricted Controlled (FR)

Exhibit 1

Figure 1
Macroeconomic Effects of Alternative Balance Sheet Policies

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Federal Funds Rate

Top-right panel
10-year Treasury Rate

Middle-left panel
30-year Mortgage Rate

Middle-right panel
Real GDP Growth (4-qtr)

Bottom-left panel
Unemployment Rate

Bottom-right panel
Core PCE Inflation (4-qtr)

Exhibit 2 (Last)

Top-left panel
(1) SOMA Holdings

Top-right panel
(2) Remittances to Treasury

Middle-left panel
(3) Remittances to Treasury Under 100 BPS Interest Rate Shock Scenario

Middle-right panel
(4) Deferred Asset*

Bottom panel
(5) Reserve Balances Around Fed Funds Liftoff*

Appendix 2: Materials used by Mr. Potter

Material for
FOMC Presentation: Financial Market Developments and Desk Operations

Simon Potter
September 12, 2012

Class II FOMC - Restricted (FR)

Exhibit 1

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(1) Decomposition of Change in Nominal Treasury Yields over Intermeeting Period

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(2) Breakeven Inflation Rates

Middle-left panel
(3) Probability Distribution of First Increase in Federal Funds Target Rate*

Middle-right panel
(4) Changes in 10-Year Treasury Yields on Survey-Based Forward Guidance Surprises

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(5) MBS Option-Adjusted Spread to Treasury*

Bottom-right panel
(6) Equity Prices and Corporate Debt Spreads

Exhibit 2

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(7) Euro Area Sovereign Debt Spreads*

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(8) Euro Area Equity and Currency Implied Volatility

Middle-left panel
(9) Euro Area Forward Rate Spreads*

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(10) Euro Area Sovereign Bond Issuance (Year-to-Date and Projected)

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(11) Monthly Changes in Bank Holdings of Euro Area Sovereign Debt

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(12) Equity Prices

Exhibit 3 (Last)

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(13) Median Monthly Coverage Ratios for MEP Purchase Operations

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(14) Average Duration of SOMA Portfolio Holdings

Middle-left panel
(15) Agency Paydowns by Month*

Middle-right panel
(16) MBS Purchases and Principal Paydowns* (Since Start of Reinvestments)

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(17) Probability of Additional Policy Actions At Current Meeting

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(18) Increase in SOMA Portfolio Holdings (Median End-2013 Forecasts)

Appendix 3: Materials used by Mr. Wilcox

Material for
Forecast Summary

David Wilcox
September 12, 2012

Class II FOMC - Restricted (FR)

Forecast Summary

Confidence Intervals Based on Tealbook Track Record

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Real GDP

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Unemployment Rate

Middle-left panel
PCE Prices

Middle-right panel
PCE Prices Excluding Food and Energy

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Consumer Sentiment

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Measures of Monthly Change in Private Payroll Employment

Appendix 4: Materials used by Mr. Lehnert

Material for Briefing on
Financial Stability

Andreas Lehnert
September 12, 2012

Class II FOMC - Restricted (FR)

Exhibit 1
Evidence on Asset Valuations

Top panel
Ten-Year Nominal Term Premium Estimates

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Forward Price-Earnings Ratio by Firm Size

Middle-right panel
House Price Overvaluation Measures

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Near- and Far-Term BB Forward Credit Spreads

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Average Debt Multiples of Highly Leveraged Loans

Exhibit 2
Evidence on Leverage and Risk-Taking

Top panel
Nonfinancial Sector Credit-to-GDP Ratio

Middle-left panel
Long-term Securities at Commercial Banks

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Core Deposits at Commercial Banks

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Life Insurers' Bond Portfolio by Maturity

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Total Agency REIT Assets

Appendix 5: Materials used by Mr. Nelson

Material for Briefing on the
Summary of Economic Projections

Ed Nelson
September 12, 2012

Class I FOMC - Restricted Controlled (FR)

Exhibit 1. Central tendencies and ranges of economic projections, 2012-15 and over the longer run

Change in real GDP

Unemployment rate

PCE inflation

Core PCE inflation

Exhibit 2. Economic projections for 2013-2015 and over the longer run (percent)

Change in real GDP

Unemployment rate

PCE inflation

Core PCE inflation

Exhibit 3. Overview of FOMC participants' assessments of appropriate monetary policy

Appropriate timing of policy firming

Appropriate pace of policy firming

Appropriate pace of policy firming

Exhibit 4. Scatterplot of unemployment and PCE inflation rates in the initial year of policy firming (in percent)

Exhibit 5. Uncertainty and risks in economic projections

Histograms, eight panels.

Uncertainty about GDP growth

Uncertainty about the unemployment rate

Uncertainty about PCE inflation

Uncertainty about core PCE inflation

Risks to GDP growth

Risks to the unemployment rate

Risks to PCE inflation

Risks to core PCE inflation

Appendix 6: Materials used by Chairman Bernanke

Material for
The Consensus Forecast Exercise

September 12-13, 2012

Class I FOMC - Restricted Controlled (FR)

Table 1. Final Proposal for the September Experimental Consensus Forecast, Conditioned on No Additional Asset Purchases or Changes in Forward Guidance

Table 2. Median Forecasts in the September SEP

Table 3. Proposed Consensus Forecast Conditioned on Alternative Policy Assumptions

Exhibit 1. Proposed Consensus Forecast Conditioned on No Additional Asset Purchases or Changes in Forward Guidance

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1. Real GDP

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2. Unemployment Rate

Bottom-left panel
3. PCE Prices

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4. Core PCE Prices

Note. Confidence intervals generated using stochastic simulations of the FRB/US model, with the model subjected to the sorts of shocks experienced since the late 1960s.

Exhibit 2. Proposed September Consensus Forecast Under Alternative Policy Assumptions Versus Optimal Control

Top panel
Federal Funds Rate

Bottom-left panel
Unemployment Rate

Bottom-right panel
PCE Prices

Appendix 7: Materials used by Mr. English

Material for
FOMC Briefing on Monetary Policy Alternatives

Bill English
September 12-13, 2012

Class I FOMC - Restricted Controlled (FR)

Alternative Monetary Policy Scenarios

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Federal Funds Rate

Top-right panel
Total Federal Reserve Assets

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Unemployment Rate

Bottom-right panel
PCE Inflation

August FOMC Statement

• 1. Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.
• 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.
• 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
• 4. The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

[Note: In the September FOMC Statement Alternatives, emphasis (strike-through) indicates strike-through text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.]

September FOMC Statement--Alternative A

• 1. Information received since the Federal Open Market Committee met in June August suggests that economic activity decelerated somewhat over the first half of this year has continued to expand at a moderate pace in recent months. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Household spending has been rising at a somewhat slower pace than earlier in the year continued to advance, but growth in business fixed investment has continued to advance appears to have slowed. Despite some further signs of improvement, The housing sector remains has shown some further signs of improvement, albeit from a depressed level. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline been subdued, although the prices of some key commodities have increased recently. and Longer-term inflation expectations have remained stable.
• 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, without further policy accommodation, economic growth to remain moderate over coming quarters and then to pick up very gradually likely would not be strong enough to generate sustained improvement in labor market conditions. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term will likely would run at or below the rate that it judges most consistent with its dual mandate its 2 percent objective.
• 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate close to 2 percent, the Committee expects to maintain a highly accommodative stance for monetary policy decided today to begin a new asset-purchase program. Specifically, the Committee now intends to purchase [ $750 billion ] of longer-term Treasury securities and [ $500 billion ] of agency mortgage-backed securities by early 2014, a combined pace of about [ $75 ] billion per month. These increases in its securities holdings should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. The Committee will closely monitor incoming information on regularly review the size and composition of its balance sheet in light of economic and financial developments and will provide additional accommodation as needed remains prepared to make adjustments as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.
• 4. This new asset-purchase program replaces the previously announced maturity extension program. In particular, the Committee is ending its sales of shorter-term Treasury securities and reinstituting its policy of rolling over maturing Treasury securities at auction. The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.
• 5. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the conclusion of this asset-purchase program. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate are likely to be warranted at least through late 2014 mid-2015.

Note: If policymakers decide that it is appropriate to reduce the remuneration rate on reserve balances, the Board of Governors would issue an accompanying statement that might read:

In a related action, the Board of Governors voted today to reduce the interest rate paid on required and excess reserve balances from 25 basis points to 15 basis points effective with the reserve maintenance period that begins on September 20, 2012.

September FOMC Statement--Alternative B

• 1. Information received since the Federal Open Market Committee met in June August suggests that economic activity decelerated somewhat over the first half of this year has continued to expand at a moderate pace in recent months. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Household spending has been rising at a somewhat slower pace than earlier in the year continued to advance, but growth in business fixed investment has continued to advance appears to have slowed. Despite some further signs of improvement, The housing sector remains has shown some further signs of improvement, albeit from a depressed level. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline been subdued, although the prices of some key commodities have increased recently. and Longer-term inflation expectations have remained stable.
• 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects is concerned that, without further policy accommodation, economic growth to remain moderate over coming quarters and then to pick up very gradually might not be strong enough to generate sustained improvement in labor market conditions. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term will likely would run at or below the rate that it judges most consistent with its dual mandate its 2 percent objective.
• 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of [ $30 | $40 ] billion per month. The Committee also decided to will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about [ $75 | $85 ] billion each month, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
• 4. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in in coming months. If the outlook for the labor market conditions does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities [ and undertake additional asset purchases | , undertake additional asset purchases, and employ its other policy tools ] as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
• 5. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate are likely to be warranted at least through late 2014 mid-2015.
  OR
  
• 5′. To support continued progress toward maximum employment and price stability, the Committee expects that exceptionally low levels of the federal funds rate will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014 this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate exceeds 6 1/2 percent, provided that inflation at a one- to two-year horizon is projected to be no more than a half percentage point above the Committee's 2 percent objective and longer-term inflation expectations continue to be well anchored. In determining the time horizon over which it maintains a highly accommodative stance of monetary policy, the Committee will also consider the pace of improvement in labor market conditions and other indicators of economic activity and prices.

September FOMC Statement--Alternative C

• 1. Information received since the Federal Open Market Committee met in June August suggests that economic activity decelerated somewhat over the first half of this year has continued to expand at a moderate pace in recent months. Growth in Employment has been slow in recent months, and the unemployment rate remains elevated increased further. Business fixed investment Private domestic demand has continued to advance, Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, and the housing sector remains depressed has shown some further signs of improvement. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable, but prices of some key commodities recently have increased significantly.
• 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below near the rate that it judges most consistent with its dual mandate Committee's 2 percent objective.
• 3. To support a stronger the economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late [ 2013 | 2014 ].
  OR
  
• 3′. To support a stronger sustainable economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. As rates of resource utilization rise toward levels consistent with maximum employment, the Committee eventually will need to make monetary policy less accommodative in order to ensure that the economy expands at a sustainable pace and to prevent inflation from persistently exceeding its longer-run objective. In determining the appropriate time to increase its target for the federal funds rate, the Committee will consider a range of factors, including actual and projected labor market conditions, the medium-term outlook for inflation, and the risks to the achievement of the Committee's objectives.
• 4. The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as necessary to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of maximum employment and price stability.

August 2012 Directive

The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its current policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. These actions should maintain the total face value of domestic securities at approximately $2.6 trillion. The Committee directs the Desk to engage in dollar roll transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability.

[Note: In the September 2012 Directive Alternatives, emphasis (strike-through) indicates strike-through text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.]

September 2012 Directive--Alternative A

The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, begin a new asset-purchase program. This program replaces the previously announced maturity extension program. Specifically, the Desk is directed to purchase $750 billion of longer-term Treasury securities and $500 billion of agency mortgage-backed securities by early 2014, a combined pace of about $75 billion per month. The Committee directs the Desk to suspend its current is also directed to reinstitute the policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. These actions should maintain increase the total face value of domestic securities at to approximately $2.6 $3.9 trillion. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability.

September 2012 Directive--Alternative B

The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its current policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. The Desk is also directed to begin purchasing agency mortgage-backed securities at a pace of about [ $30 | $40 ] billion per month. These actions should maintain the total face value of domestic securities at approximately $2.6 trillion. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability.

September 2012 Directive--Alternative C

The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it announced in June to purchase Treasury securities with remaining maturities of 6 years to 30 years with a total face value of about $267 billion by the end of December 2012, and to sell or redeem Treasury securities with remaining maturities of approximately 3 years or less with a total face value of about $267 billion. For the duration of this program, the Committee directs the Desk to suspend its current policy of rolling over maturing Treasury securities into new issues. The Committee directs the Desk to maintain its existing policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities. These actions should maintain the total face value of domestic securities at approximately $2.6 trillion. The Committee directs the Desk to engage in dollar roll transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability.

Appendix 8: Materials used by Ms. Logan

Material for
FOMC Presentation: Draft Desk Operating Statement

Lorie Logan
September 13, 2012

Class I FOMC - Restricted Controlled (FR)

Statement Regarding Transactions in Agency Mortgage-Backed Securities and Treasury Securities

On September 13, 2012, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to begin purchasing additional agency mortgage-backed securities (MBS) at a pace of [$30 | 40] billion per month. The FOMC also directed the Desk to continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities as announced in June and to maintain its existing policy of reinvesting principal payments from the Federal Reserve's holdings of agency debt and agency MBS in agency MBS.

The FOMC noted that these actions, which together will increase the Committee's holdings of longer-term securities by about $[75 | 85] billion each month, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

Purchases of Agency MBS

The purchases of additional agency MBS will begin tomorrow, and are expected to total approximately $[17 | 23] billion over the remainder of September. Going forward, details associated with the additional amount of MBS to be purchased each month will be announced on or around the last business day of the prior month.

Consistent with current practice, the planned amount of purchases associated with reinvestments of principal payments on holdings of agency securities that are anticipated to take place over each monthly period will be announced on or around the eighth business day of the prior month. The next monthly reinvestment purchase amount was also published today, and can be found here: http://www.newyorkfed.org/markets/ambs/ambs_schedule.html.

The Desk anticipates that the agency MBS purchases associated with both the additional asset purchases and the principal reinvestments will likely be concentrated in newly-issued agency MBS in the To-Be-Announced (TBA) market, although the Desk may purchase other agency MBS if market conditions warrant.

Consistent with current practices, all purchases of agency MBS will be conducted with the Federal Reserve's primary dealers through a competitive bidding process and results will be published on the Federal Reserve Bank of New York's website. The Desk will also continue to publish transaction prices for individual operations on a monthly basis.

Frequently Asked Questions associated with these purchases will be released later today.

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