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To support the economy, the Federal Reserve amassed a large portfolio of long-term bonds. We assess the Fed’s associated interest rate risk — including potential losses to its Treasury securities holdings and declines in remittances to the Treasury. Unlike past examinations of this interest...
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Previous research has emphasized the portfolio balance effects of Federal Reserve bond purchases, in which a reduced … bond supply lowers term premia. In contrast, we find that such purchases have important signaling effects that lower …
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