Journal Article

Stress testing the Fed


Abstract: The Federal Reserve has purchased a large amount of longer-term bonds since December 2008. While these purchases have helped support a strengthening economy, the Fed?s resulting financial position may incur significant declines in bond values and net income when interest rates rise. However, analyzing a range of possible future interest rate scenarios?and their associated probabilities?shows that potential losses associated with these declines are very likely to be manageable.

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Provider: Federal Reserve Bank of San Francisco

Part of Series: FRBSF Economic Letter

Publication Date: 2014

Order Number: 08