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Fed balance sheet grows to record $2.762 trillion

Fed balance sheet grows to record $2.762 trillion (by Greg Robb)

WASHINGTON (MarketWatch) - The Federal Reserve's balance sheet expanded to a record $2.762 trillion in the week ended May 18 from $2.749 trillion in the prior week, the central bank said 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. Fed officials have begun to discuss how to shrink the balance sheet, according to the minutes of their April meeting released Wednesday. Fed officials want to return to holding only Treasurys and get the balance sheet back to pre-crisis levels. The Fed's assets and liabilities were only $870 billion in December 2007. Most Fed officials preferred that asset sales begin after a hike in short-term rates, and want the sales to be put on a predictable and preannounced timetable. The report shows that the Fed's holdings of Treasurys rose to $1.495 trillion from $1.466 trillion in the previous week. The Fed's holdings of mortgage-backed securities declined to $924 billion from $927 in the prior week.

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Fed balance sheet grows to record $2.762 trillion