Fed Pauses Treasury Bill Purchases After Buying About $215 Billion Since December

Federal Reserve Treasury bill purchases and balance sheet growth as the central bank pauses

The Federal Reserve has paused a program of Treasury bill purchases aimed at supporting bank reserves after buying about $215 billion in bills since December, according to Coin Bureau.

The Fed has nevertheless scheduled about $15.6 billion in additional bill purchases through October 14. Those purchases are intended to replace mortgage-backed securities rolling off the central bank’s balance sheet, according to the figures cited by Coin Bureau.

The Federal Reserve’s September 16 implementation note said the central bank would increase its holdings of securities through Treasury financial bill purchases, and if needed other Treasury securities with maturities of three years or less, when appropriate to maintain an ample level of reserves.

Fed Balance Sheet Expands Since December

Coin Bureau said the Fed’s balance sheet has grown by $209 billion since December, a much smaller increase than the $4.8 trillion expansion recorded during the Covid period.

The latest Federal Reserve data show that the central bank held about $4.56 trillion in U.S. Treasury securities and roughly $1.91 trillion in mortgage-backed securities as of September 23. Treasury bill holdings stood at about $554.4 billion.

The figures reflect the broader changes in the Fed’s securities portfolio as mortgage-backed securities mature or roll off and Treasury securities are added.

The Fed has been managing its balance sheet while maintaining what officials describe as an ample level of reserves. Its September policy implementation instructions explicitly authorized Treasury bill purchases for that purpose.

Markets Watch for a Possible October Restart

Some banks expect the Treasury bill purchases to restart in October, according to Coin Bureau. The Federal Reserve, however, has not announced that a restart will take place.

The distinction matters because the scheduled purchases through October 14 do not necessarily represent a resumption of the broader reserve-boosting buying program described in the X post. The Fed’s official instructions leave the timing of additional markets purchases subject to its assessment of reserve conditions.

Recent balance-sheet data show Treasury bill holdings have remained broadly elevated. The Fed reported $553.8 billion in bill holdings on September 16, compared with $548.4 billion on September 2.

The Federal Reserve’s approach is being closely monitored as financial institutions assess the level of reserves available across the banking system. For now, the central bank has provided no announced date for restarting the paused purchases, leaving October as a period that banks and market participants will watch for further guidance.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.