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Fed balance sheet grows to record $2.88 trillion

Fed balance sheet grows to record $2.88 trillion (by Greg Robb)

WASHINGTON (MarketWatch) - The Federal Reserve's balance sheet expanded to a record $2.88 trillion in the week ended July 13 from $2.87 trillion in the prior week, the central bank said Thursday. The Fed balance sheet should stop growing as the central bank completed its plan to purchase $600 billion in Treasurys at the end of June. The Fed had talked about how to shrink its bloated balance sheet but weak economic data has put those plans on hold perhaps until next year. Fed chairman Ben Bernanke has raised the possibility of another round of asset purchases if the economy falters. Fed officials eventually want to return to holding only Treasurys and get the balance sheet back to pre-crisis levels, a process that could take five years. The Fed's assets and liabilities were only $870 billion in December 2007. The report shows that the Fed's holdings of Treasurys rose to $1.63 trillion from $1.62 trillion in the previous week. The Fed's holdings of mortgage-backed securities held steady at $908.8 billion from last week. Bank reserves rose slightly to $1.68 trillion from $1.65 trillion in the prior week.