Tracker: The Federal Reserve’s balance sheet assets

July 2, 2024

introduction

This tracker tracks the Federal Reserve’s (Fed’s) total consolidated assets reported on its balance sheet, the best indicator of direct Fed intervention in the economy.

context

Because of its dual mandate, the Fed must ensure both stable prices and maximum employment. The Fed’s traditional tool for achieving these goals is adjusting the federal funds rate, the short-term interest rate that sets the cost for banks to lend money to each other overnight. But the financial crisis of 2007 and 2008 showed that even cutting the rate to zero was considered insufficient to support economies in freefall. So the Fed resorted to more unusual tactics. One of these measures was what the Fed calls “large-scale asset purchases,” which is commonly known as “quantitative easing.” As part of this process, the Fed enters the market to buy securities – typically mortgage-backed securities (MBS) and Treasuries – thereby pumping both capital and liquidity into the market. This approach is not without risks – for the first time in its history, the Fed is a regulator, supervisor, and now a participant in the economy.

The evolution of quantitative easing as the Fed’s panacea in times of crisis has led to an unprecedented focus on one of its traditionally low-profile aspects – the Fed’s total assets. Like any other company, securities the Fed buys are considered assets and are therefore recorded on the Fed’s balance sheet. This balance sheet is therefore the most meaningful guide to the state of quantitative easing and, by extension, the extent to which the Fed deems it necessary to intervene in the economy.

Every week, the Federal Reserve releases its balance sheet, usually on Wednesday afternoon around 4:30 p.m.

Away 26 JuneThe Fed’s assets amount to 7.2 trillion US dollars.