September 16, 2010 / 8:40 PM / 7 years ago

UPDATE 1-U.S. Fed's balance sheet shrinks in latest week

 (Adds background)
 NEW YORK, Sept 16 (Reuters) - 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:
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
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)

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