Total Fed Assets In Step With Our Projections Through January

February 04, 2014
By Knowledge Leaders Team in Uncategorized

We have seen research that suggests that for each $800 billion in Fed asset purchases it equates to approximately a 100 bps reduction in the fed funds rate. Based on the tapering plan the fed set out in December ($10 billion in fewer purchases approximately every six weeks) the Fed will buy approximately $460 billion in assets 2014. This would imply a simulated federal funds rate of -4.3% at the end of 2014. So far, as this chart shows, the Fed is right on pace though January.


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