Fed balance sheet expands to record (by Greg Robb)

WASHINGTON (MarketWatch) - The Federal Reserve's balance sheet expanded to a record $2.695 trillion in the week ended April 27 from $2.690 trillion in the prior week, the central bank said on Thursday. The Fed continues to buy bonds to try to lower long-term interest rates, under its plan, dubbed quantitative easing or QE2, to purchase $600 billion of Treasurys by the end of June. On Wednesday, Fed Chairman Ben Bernanke said the Fed planned to complete the asset purchases on schedule and then planned to freeze the balance sheet's size by reinvesting maturing securities. Bernanke said that shrinking the balance sheet would be a tightening of monetary policy. The report shows that the Fed's holdings of Treasurys rose to $1.413 trillion from $1.402 trillion in the previous week. The Fed's holdings of mortgage-backed securities fell to $927 billion from $920 billion in the prior week.