Fed asks about more easing in regular survey: source

NEW YORK (Reuters) - The New York Fed has asked market participants about their expectations for further Fed easing as part of its regular pre-Federal Reserve meeting surveys, a person familiar with the survey said on Thursday.

The Fed asked the 18 banks with which it deals directly about the impact on 10-year Treasury nominal and real yields in various scenarios: no further purchases or the buying of $250 billion, $500 billion and $1 trillion in securities over six months, the person said.

The contents of the survey were first reported by Bloomberg News.

A Reuters poll of 17 primary dealers on Wednesday showed dealers forecasts on the total size of a renewed Fed purchase program ranging widely between $250 billion and $2 trillion with most expecting purchases of between $80 billion and $100 billion a month.

The Fed also asked market participants whether they expect the Fed to buy Treasuries, agency mortgage-backed securities or agency debt, the source said.

No dealers expect the Fed to buy agency debt, according to a Reuters poll this week showing that the Fed is providing a range of options to capture market thinking.

“They do these surveys ahead of every Fed meeting,” said Michael Gapen, an economist at Barclays Capital and a former Fed staffer.

“They try and do a very good job of not being leading with the questions. They want to provide a menu out there to see what participants are thinking,” he said.

The New York Fed’s markets desk does not make policy. Part of its role is to gather information and report back to the Fed’s policy-setting committee on market expectations for policy. This helps policymakers to gauge the potential market reaction to any policy decision.

Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut, who had not seen the survey, said the existence of the survey was known outside the primary dealer community since earlier this week and had not affected prices.

“Perhaps on the margin it gave a little more guidance to people in terms of the range of a potential program,” he said.

Reporting by Kristina Cooke and Emily Flitter; Editing by Theodore d’Afflisio