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Post by Forever Sunshine on Feb 23, 2013 0:02:28 GMT -5
After years of record profits, the Fed is likely to be saddled with losses starting in 2017 or 2018, economists predict in a paper that was presented Friday at the U.S. Monetary Policy Forum, a New York conference organized by the University of Chicago Booth School of Business.
Here's the scenario they think will play out: As the economy improves, the Fed will eventually tighten monetary policy. The central bank will stop buying mortgage-backed securities and Treasuries by the end of this year, they believe, and start raising interest rates in 2015.
Eventually, the Fed will have to start selling off the massive collection of bonds it acquired in its stimulus efforts.
And when that time comes, even the Fed admits that it will probably incur losses.
money.cnn.com/2013/02/22/news/economy/fed-future-losses/index.html?source=cnn_bin
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