There is also only a 5 percent chance that
rising rates would result in the Fed paying out more in interest
to banks as part of its eventual monetary tightening than it
earns in fixed payments on its securities, the researchers
"Our analysis shows that the likelihood of significant losses on
the Fed's Treasury portfolio or a long cessation of Treasury
remittances is very low," they wrote.
The research is aimed at addressing rising concern within the
central bank that the Fed could face political pressure if
capital losses or a rise in interest payments force it to reduce
or eliminate the tens of billions of dollars in profits it sends
to the Treasury each year.
(Reporting by Ann Saphir; editing by Leslie Adler)
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