Fed’s MBS Program

Q. What happens to the proceeds from maturing securities and prepayments ?

A. The Manager of the System Open Market Account has said that the System’s holdings of securities will tend to decline gradually after the completion of the asset purchase programs, reflecting maturing issues and prepayments on holdings of MBS. The Manager noted that the Committee would likely wish to discuss in detail its policy for reinvesting the proceeds of maturing issues and prepayments; he proposed, as an interim approach, continuing the practice of NOT reinvesting the proceeds of maturing agency securities or MBS prepayments. Meeting participants supported that interim approach pending further discussion at future meetings.

note: answer is excerpt from f.o.m.c. minutes

Related:
US MBS: End To NY Fed’s MBS Program Being Closely Followed