MNI POLICY: Fed Balance Sheet at Record $6.66T, Growth Slows

By Evan Ryser

     WASHINGTON (MNI) - The Federal Reserve's balance sheet reached another

record of USD6.66 trillion as of April 29, while growth slowed compared with

recent weeks.

     The weekly snapshot released Thursday shows the Fed's portfolio increased

USD82.8 billion. The balance sheet is now almost one-third the size of the U.S.

economy and set to grow larger as the Fed sets up emergency facilities and GDP

shrinks.

     The central bank balance sheet growth was driven Treasury securities rising

USD62.1 billion to USD3.971 trillion.  

     Use of the Fed's central bank liquidity swap lines, which allow foreign

central banks to exchange their local currency for dollars, rose USD29.2 billion

to USD438.9 billion. The Fed has swap arrangements with five central banks and

on March 19 added swaps with nine others to be in place for at least six months.

     Since early March, the Fed has slashed interest rates to zero, restarted

bond purchases and rolled out an unprecedented range of programs to keep credit

flowing. The Fed's balance sheet is up almost 60% from USD4.241 trillion in the

first week of March.

     --NEW PROGRAMS

     The Fed Thursday expanded two programs that it is working to stand up. The

central bank said its USD600 billion Main Street lending program would include

companies with up to 15,000 employees and USD5 billion in annual revenue last

year, instead of limiting it to companies with up to 10,000 employees and USD2.5

billion in revenue. The Fed also lowered the minimum loan size to USD500,000

from USD1 million. 

     The Fed also expanded access to its newest items appearing on its balance

sheet Thursday, the Paycheck Protection Program Liquidity Facility. The Fed held

USD19.5 billion of PPP loans as of Wednesday, up USD11.5 billion from a week

ago.

     Mortgage-backed securities holdings shrank by USD17.8 billion to USD1.605

trillion from the prior week. 

     Loan balances for the Fed's discount window, its last-resort lending

program, dropped slightly to USD31.8 billion on Wednesday, down USD1.9 billion

from a week ago. 

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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