NEW YORK, Sept 16 The U.S. Federal Reserve's balance sheet shrank in the latest week, Fed data released on Thursday showed.
The balance sheet -- a broad gauge of Fed lending to the financial system -- contracted to $2.279 trillion in the week ended Sept. 15 from $2.288 trillion the previous week.
Fed balance sheet liabilities remain below their record high of $2.334 trillion hit in May. After declining early last year, the balance sheet surged amid the U.S. central bank's asset-buying program. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For balance sheet graphic: link.reuters.com/buf92k) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The program, known as quantitative easing, was broadly aimed at holding down borrowing costs and supporting the ailing housing market as the economy recovered from the worst recession in 70 years.
That effort was also led by the Fed's purchases of mortgage-related securities, which came to a conclusion at the end of March.
However, the Fed took a small but significant step on Aug. 10 to counter a weakening U.S. economic recovery, saying it would use cash from maturing mortgage bonds it holds to buy more government debt.
The Fed's holdings of mortgage-backed securities backed by housing finance companies Fannie Mae FNMA.OB and Freddie Mac FMCC.OB shrank to $1.092 trillion on Sept 15 from the previous week's $1.103 trillion.
The U.S. central bank's ownership of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank System was $154.52 billion on Sept. 15, down from $156.50 billion the week before.
Primary credit via the Fed's discount window averaged $29 million per day in the latest week, holding steady compared to the previous week. (Reporting by Emily Flitter: Editing by Andrew Hay)