In a recent statement, President of the Federal Reserve Bank of Atlanta Dennis Lockhart said that the performance of the economy would determine how future use of Treasury buying programs would proceed.
Lockhart said he was willing to keep an open mind about whether the Federal Reserve would need to purchase any government debt beyond the $300 billion it has already agreed to purchase. As such, the issue would be under further discussion at upcoming Federal Reserve meetings. What options are taken will be based on the current economic conditions.
Concerning Treasurys, the Federal Reserve has almost reached the close of its committed buying campaign. Additionally, the central bank has been buying up securities as well as a larger amount of mortgage-related debt to lower its borrowing costs.
Lockhart has also made it known that the Federal Reserve never intended to establish a given yield level. In fact, the central bank’s main objective was to influence the markets to hold the yields at a much lower level than they would have been otherwise.
Lockhart’s statements were made to reporters following a speech made before a gathering of local business leaders in Nashville. President Lockhart is also a voting member of the Federal Open Market Committee, a group responsible for setting the interest rates.
The Federal Reserve bank president has made it clear to reporters and other officials that he believes the Federal Reserve has no intentions of requiring banks to hold reserves in near future. Lockhart has also noted that any proposals to give the Federal Reserve more power to function as a regulator of financial stability are just acknowledging what has become a reality based on the role it is already playing.
The coming months may provide the data to determine if this is an accurate estimation or not.
Tags: treasury debt purchases, federal reserve, federal
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