it would limit its purchases to 70 percent as part of its plan to expand its balance sheet ,FED Said

The Federal Reserve said it would limit its purchases to 70 percent of any single security of the Treasury as part of its plan to expand its balance sheet is known as quantitative easing.

The central bank had temporarily relaxed its limit of 35 percent in November to announce additional purchases of $ 600 billion in Treasuries until June. The New York Fed said in a statement given percentages allowable purchase of three brackets into account the open market system, or EMS, which consists of values that has, over 30 percent to 70 percent.

The Fed has acquired about 137.5 billion U.S. dollars of Treasury bonds since resuming the purchase of U.S. government debt on 12 November. The central bank may buy as much as $ 17 billion in debt through two open market operations today, as much as you restart the program after completing 1.7 trillion U.S. dollars to buy debt in March .

"This gives an explanation about what the end game is that the Fed with regard to purchases of individual security," said Simon Thomas, a government economist in New York debt of Jefferies Group Inc., one of 18 major dealers who trade with the central bank. "There are some issues that the Fed has more than 40 percent and people wondered if it would still be cheaper if there is no liquidity because the Federal Reserve has them all. Now not only can the Fed with 100 percent of a problem but also will take much longer to increase their participation. "

Farm

The Fed introduced a sliding scale for the amount of individual guarantees that you can buy in an operation when it has more than 30 percent. The rate of increase of debt to be purchased from a reduction in safety especially as the percentage held in its account increases in SOMA.

As of December 17, the Fed owned 49.93 percent of the note coupon of 8.75 percent Treasury due August 15, 2020, and 49.82 percent of the 8.5 percent coupon maturing in footnote 15 February 2020, according to Fed data compiled by Barclays Plc.

The Fed had said Nov. 3 that would allow individual security holdings to the principle of self-imposed 35 percent above the level "only modest increases, according to a statement released that day on the website of the Fed's New York. Once the security has reached 30 percent, "purchase, the warranty offered will usually have a cap of 5 percent of the total issue size outstanding in each subsequent operation," the statement said.

The central bank also plans to re-invest 250 billion U.S. dollars to $ 300 million dollars in revenue from mortgage-backed debt and agency securities in Treasury bonds.