NEW YORK: The Federal Reserve is sketching out plans to prevent an abrupt contraction in its massive balance sheet next year, when some US$500bil in bonds expire and risk disrupting markets and the US economic recovery.
Though it ended a stimulative asset-purchase programme last October, the Fed is still buying mortgage and Treasury bonds to replenish its US$4.5-trillion portfolio as holdings mature. The central bank has said it will keep reinvesting until some time after it begins raising interest rates later this year.
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