Fed says has been reinvesting maturing Treasuries

18. February. 2010

NEW YORK - The Federal Reserve has been reinvesting proceeds of maturing Treasuries by acquiring new issues, the U.S. central bank said on Wednesday.

"The (Fed's open market) Desk had continued to reinvest the proceeds of maturing Treasury securities by acquiring newly auctioned Treasury securities issued on the same day its existing holdings matured," the minutes to the Fed's January meeting said.

"Participants agreed that the Desk should continue this practice for now, but the Committee would consider further its policy for redeeming or reinvesting maturing Treasury securities."

The Federal Reserve bought a total of $300 billion in Treasuries as part of a quantitative easing strategy it launched after its March meeting aimed at keeping interest rates low throughout the economy.

Its last operation in this Treasury buying program took place in October.

However, relatively few of the bonds purchased under that program would have matured by now.

The Fed has also long been a holder of Treasuries in its System Open Market Account (SOMA), which is managed by the Federal Reserve Bank of New York and acquires newly issued government debt for a variety of purposes.
[Reuters]