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The Fed's interest rate risk

Author

Listed:
  • Glenn D. Rudebusch

Abstract

To make financial conditions more supportive of economic growth, the Federal Reserve has purchased large amounts of longer-term securities in recent years. The Fed's resulting securities portfolio has generated substantial income but may incur financial losses when market interest rates rise. Such interest rate risk appears modest, especially relative to the Fed's policy objectives of full employment and price stability.

Suggested Citation

  • Glenn D. Rudebusch, 2011. "The Fed's interest rate risk," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue apr11.
    • Handle: RePEc:fip:fedfel:y:2011:i:apr11:n:2011-11
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    References listed on IDEAS

    as
    1. Glenn D. Rudebusch, 2009. "The Fed's monetary policy response to the current crisis," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may22.
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    Cited by:

    1. Bagus, Philipp & Howden, David, 2014. "Central Bank Insolvency: Causes, Effects and Remedies," MPRA Paper 79605, University Library of Munich, Germany.
    2. Lars E. O. Svensson, 2011. "Practical Monetary Policy: Examples from Sweden and the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 289-352.
    3. Lars E. O. Svensson, 2011. "Practical Monetary Policy: Examples from Sweden and the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 289-352.

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