Under its efforts, known as quantitative easing, the Fed purchased government and mortgage bonds to dampen the interest rate on long-term bonds that influence the price of a mortgage, car loan and other big purchases. In doing so, the Fed also forced investors out of safe havens in search of better returns on risk taking. It’s one reason why the stock market has soared in recent years.
The Fed’s total assets were $4.5 trillion last year and its holdings generated $115.9 billion in interest income, the central bank said Friday, and that reflected an increase of $25.5 billion from 2013. The Fed also paid banks $6.9 billion in interest income for their balances held at Federal Reserve district banks last year.
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