October 25, 2012 / 8:36 PM / 5 years ago

Fed balance sheet shrinks in latest week

NEW YORK (Reuters) - The Federal Reserve’s balance sheet contracted in the latest week as a result of a decline in holdings of Treasuries securities, Fed data released on Thursday showed.

The Fed’s balance sheet - a broad gauge of its lending to the financial system - stood at $2.823 trillion on October 24, down from $2.829 trillion on October 17.

The Fed’s holdings of Treasuries totaled $1.647 trillion as of Wednesday, below the $1.659 trillion seen the previous week.

But its ownership of mortgage bonds guaranteed by Fannie Mae FNMA.OB, Freddie Mac FMCC.OB and the Government National Mortgage Association (Ginnie Mae) totaled $868.07 billion, up from $862.30 billion the previous week.

Under the Fed’s latest stimulus program, announced last month and dubbed QE3, the central bank has pledged to buy $40 billion per month of agency mortgage-backed securities.

The Fed’s holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank system totaled $82.75 billion, unchanged from the previous week.

The Fed’s overnight direct loans to credit-worthy banks via its discount window averaged $4 million a day during the week, slower than the $12 million a day average rate the prior week.

Reporting by Richard Leong; Editing by Chizu Nomiyama

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