Open market operations during 1997

Abstract

In 1997 the Trading Desk at the Federal Reserve Bank of New York managed reserve conditions with the objective of maintaining the federal funds rate around the level desired by the Federal Open Market Committee. In 1997 the portfolio of domestic securities in the System Open Market Account expanded by a record $41 billion (excluding all temporary operations), ending the year at$448 billion. Outright purchases of Treasury securities totaled $44 billion, offset to a small degree by redemptions of some Treasury and federal agency issues. The growth in the portfolio during 1997 was significantly higher than the$15 billion increase recorded in the preceding year. The Desk closely observed the behavior of the federal funds rate for any indication that the decline in operating balances associated with the spread of retail sweep programs or any other development was impeding its ability to control the funds rate or contributing to volatility in the rate. Volatility in the federal funds rate did not increase from the previous year, but it remained above the levels that had characterized earlier years.Open market operations ; Monetary policy ; Federal funds market (United States) ; Federal Open Market Committee