On December 15, 2021, the Federal Open Market Committee (FOMC) decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities (MBS), starting with the mid-January purchase schedule.
Specifically, it directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to increase the System Open Market Account (SOMA) holdings of Treasury securities by at least $40 billion per month and of agency MBS by at least $20 billion per month during the monthly purchase period beginning on January 14, 2022. The Desk was also directed to increase holdings of Treasury securities and agency MBS by additional amounts as needed to sustain smooth functioning of markets for these securities.
The FOMC judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook. The Desk will complete the monthly purchase plans issued on December 13, 2021, as directed by the FOMC.
The Desk’s purchases of Treasury securities will continue to be conducted across a range of maturities and security types in a manner consistent with current practice. The Desk will also continue to roll over at auction all principal payments from SOMA holdings of maturing Treasury securities. For information on purchase amounts and schedules, see Treasury Securities Operational Details.
Similarly, the Desk’s purchases of agency MBS will continue to generally be concentrated in recently produced coupons in 30-year and 15-year fixed rate agency MBS in the To-Be-Announced market. The Desk will also continue to reinvest principal payments from agency MBS and agency debt in agency MBS.
NY Federal Reserve Bank
