Fed expects to finish $200 billion agency debt purchase program in Q1

By Angela McDaniels

Tacoma, Wash., Sept. 23 - The Federal Reserve's Federal Open Market Committee now expects to complete its purchases of agency debt by the end of the first quarter of 2010, according to a news release.

The debt purchase program was previously expected to wrap by the end of 2009.

In addition, the Federal Reserve Bank of New York said that agents acting on behalf of its Open Market Trading Desk will gradually reduce the size and frequency of individual agency debt purchases.

The frequency of purchases will remain, on average, once per week before declining to once every two weeks at some point during the first quarter.

As previously reported, the Fed will buy up to $200 billion of agency debt and $1.25 trillion of agency mortgage-backed securities in order to support mortgage lending and housing markets and to improve overall conditions in private credit markets.

The Fed said it will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in the financial markets.

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