WASHINGTON (MNI) – The following is a statement by the New York
Federal Reserve Bank Wednesday:

On June 22, 2011, the Federal Open Market Committee (FOMC) directed
the Open Market Trading Desk at the Federal Reserve Bank of New York
(the Desk) to complete purchases of $600 billion of longer-term Treasury
securities by the end of June. The FOMC also directed the Desk to
maintain its existing policy of reinvesting principal payments on all
domestic securities in the System Open Market Account in Treasury
securities in order to maintain the total face value of domestic
securities at approximately $2.6 trillion.

Under the existing reinvestment policy, principal payments from
agency debt and agency mortgage-backed securities (MBS) are reinvested
in longer-term Treasury securities. In implementing this policy going
forward, the Desk will follow operating practices similar to those
established during the $600 billion Treasury purchase program.

Purchases will be allocated across maturities according to a
distribution that is nearly identical to that executed under the
Treasury purchase program. The only change to the distribution is that
the two maturity sectors beyond 10 years from the earlier purchase
program will be combined into a single maturity sector of 10 to 30 years
in order to achieve greater operational simplicity. Specifically, the
Desk plans to distribute purchases across seven maturity sectors based
on the following approximate weights:

Nominal Coupon Securities by Maturity Range* TIPS**

1.5-2.5 2.5-4 4-5.5 5.5-7 7-10 10-30 1.5-30
Years Years Years Years Years Years Years
5% 20% 20% 23% 23% 6% 3%

*The on-the-run 7-year note will be considered part of the 5- to
7-year sector, and the on-the-run 10-year note will be considered part
of the 7- to 10-year sector.

**TIPS weights are based on unadjusted par amounts.

The size and frequency of operations will be reduced to levels
commensurate with agency debt and MBS principal payments. At this time,
the Desk anticipates conducting one operation per month in each maturity
sector.

The Desk will continue to release a tentative schedule of purchase
operations on or around the eighth business day of each month, with each
schedule providing information on the operations expected to take place
through the middle of the following month. The next schedule will be
released on July 13, 2011.

** Market News International Washington Bureau: 202-371-2121 **

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