Fed to Start Buying $60 Billion of Treasury Bills Per Month

The Federal Reserve plans to rebuild its balance sheet by purchasing Treasury bills to increase reserves, aiming for a regime of ample reserves. This move is intended to stabilize interest rates and reduce volatility in the repo market. The Fed's actions are not considered quantitative easing (QE) as they target the short end of the curve. The balance sheet is expected to grow to around $4 trillion, with ongoing adjustments as the economy and currency circulation expand.

What prompted the Federal Reserve to consider rebuilding its balance sheet?

• A spike in the repo market

• A rise in foreign investments

• A sudden increase in inflation

• A decrease in employment rates

How much shortfall has the Fed identified in its balance sheet?

• $250 to $300 billion

• $100 to $150 billion

• $200 to $250 billion

• $350 to $400 billion

How does the Fed plan to manage the impact of its purchases on the Treasury bill market?

• By focusing on foreign markets

• By avoiding purchases altogether

• By spreading out purchases over time

• By making large, immediate purchases

What is the primary goal of the Fed's current strategy regarding interest rates?

• To eliminate interest rates entirely

• To maintain stable interest rates

• To decrease interest rates

• To increase interest rates significantly

What is the expected size of the Fed's balance sheet in the coming years?

• $2 trillion

• $3 trillion

• $4 trillion

• $5 trillion