Big Increases in Fed Bond Purchases Unlikely: Report

U.S. Federal Reserve officials are not likely to considerably increase purchases of U.S. Treasurys and mortgage-backed securities when they meet in late June, the Wall Street Journal reported on its website.

However, facing rising bond yields and fresh signs of an improving economy, officials could make other adjustments, the paper said, without citing any sources.

At their June 23-24 meeting in Washington, Fed officials may discuss stretching purchases of Treasury securities or mortgage-backed securities over a longer period of time, the paper said, adding that such a move would avoid an abrupt end to the buying and give the Fed time to assess the outlook.

The Fed has pledged to buy $300 billion of longer-term Treasury securities by autumn and $1.45 trillion of mortgage debt by the end of this year.

The Fed has so far purchased $156.5 billion of government bonds, according to the paper.

Officials could also change the mix of their purchases, the Journal said.

At the last Fed meeting on April 28-29, some policy-makers favored increasing the scale of the Treasuries buying to support the recovery, minutes of that gathering showed, but the consensus at that time was to wait and see.

Any decision to go or stay on hold will depend on how the Fed diagnoses a recent steepening in the yield curve, which measures the spread between yields on short- and longer-term government debt.

Atlanta Federal Reserve President Dennis Lockhart said on Thursday he was open-minded about increasing central bank purchases of Treasury securities, and troubled by rising mortgage rates amid higher bond yields.

Government bond yields are often used as benchmarks for loans such as mortgages, and some analysts worry that higher borrowing costs for businesses and consumers could stunt an economic recovery.

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