UPDATE 1-U.S. Fed balance sheet swells on bond purchase

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NEW YORK, Dec 23 (BestGrowthStock) – The U.S. Federal Reserve’s
balance sheet grew for an eighth consecutive week to a record
level due to its purchases of Treasuries, Fed data released on
Thursday showed.

Last month, the U.S. central bank started a second round of
quantitative easing, known as QE2, in which it is buying up to
$600 billion in U.S. government debt over an eight-month period
in a bid to support economic growth.

The balance sheet — a broad gauge of Fed lending to the
financial system — expanded to $2.410 trillion in the week
ended Dec. 22 from $2.368 trillion the prior week.

Three weeks ago, the Fed’s balance sheet surpassed the
prior peak of $2.333 trillion set in May as it was ending its
first round of bond purchases. That involved $300 billion of
Treasuries and $1.425 billion in mortgage-related securities.

The Fed’s QE2 follows its use of proceeds from maturing
mortgage securities in its portfolio, a move that started in
August.

The central bank’s holding of U.S. government securities
totaled $1.007 trillion on Wednesday, up from $967.55 billion
last week.

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Graphic showing balance sheet: http://link.reuters.com/buf92k
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The Fed’s ownership of mortgage bonds guaranteed by Fannie
Mae (FNMA.OB: ), Freddie Mac (FMCC.OB: ) and the Government
National Mortgage Association (Ginnie Mae) slipped to $1.008
trillion from $1.009 trillion a week ago.

The Fed’s holdings of debt issued by Fannie, Freddie and
the Federal Home Loan Bank system declined to $147.46 billion
from $147.88 a week earlier.

The Fed’s overnight direct loans to credit-worthy banks via
its discount window averaged $28 million a day in the week
ended Wednesday, more than the $22 million daily pace last
week.
(Reporting by Ellen Freilich; Editing by Dan Grebler)

UPDATE 1-U.S. Fed balance sheet swells on bond purchase