WASHINGTON (MNI) – The following is a statement from the New York
Federal Reserve regarding transactions in agency mortgage-backed
securities and treasury securities:

On September 13, 2012, the Federal Open Market Committee (FOMC)
directed the Open Market Trading Desk (the Desk) at the Federal Reserve
Bank of New York to begin purchasing additional agency mortgage-backed
securities (MBS) at a pace of $40 billion per month. The FOMC also
directed the Desk to continue through the end of the year its program to
extend the average maturity of its holdings of Treasury securities as
announced in June and to maintain its existing policy of reinvesting
principal payments from the Federal Reserve’s holdings of agency debt
and agency MBS in agency MBS. The FOMC noted that these actions, which
together will increase the Committee’s holdings of longerterm securities
by about $85 billion each month through the end of the year, should put
downward pressure on longer-term interest rates, support mortgage
markets, and help to make broader financial conditions more
accommodative.

Purchases of Agency MBS

The purchases of additional agency MBS will begin tomorrow, and are
expected to total approximately $23 billion over the remainder of
September. Going forward, details associated with the additional amount
of MBS to be purchased each month will be announced on or around the
last business day of the prior month.

Consistent with current practice, the planned amount of purchases
associated with reinvestments of principal payments on holdings of
agency securities that are anticipated to take place over each monthly
period will be announced on or around the eighth business day of the
prior month. The next monthly reinvestment purchase amount was also
published today, and can be found here:

http://www.newyorkfed.org/markets/ambs/ambs_schedule.html.

The Desk anticipates that the agency MBS purchases associated with
both the additional asset purchases and the principal reinvestments
will likely be concentrated in newly-issued agency MBS in the
To-Be-Announced (TBA) market, although the Desk may purchase other
agency MBS if market conditions warrant.

Consistent with current practices, all purchases of agency MBS will
be conducted with the Federal Reserve’s primary dealers through a
competitive bidding process and results will be published on the Federal
Reserve Bank of New York’s website. The Desk will also continue to
publish transaction prices for individual operations on a monthly basis.

Frequently Asked Questions associated with these purchases will be
released later today

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: MMUFE$,MGU$$$,M$U$$$]