WASHINGTON, March 17 (UPI) -- Analysts speculate the U.S. Federal Reserve could move toward buying government debt during a policy meeting that beganns Tuesday.
The Bank of England made a move last month to purchase British government debt, which helped drive down yields on 10-year notes, the Financial Times reported.
Economist Richard Berner at Morgan Stanley said, "the potential benefits of buying Treasuries seem to outweigh their costs." One tactic, Berner explained, would be to authorize the New York Fed to purchase Treasuries, but not mandate it do so.
A second possibility for the Fed's next move is to shore up liquidity by increasing its purchases of mortgage-related securities through the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association.
"We believe the focus is still on mortgages," Merrill Lynch economist Drew Matus told the Times.
The third option, that of reducing bank-to-bank lending rates is, essentially, off the table, as rates are already set at an historic low of zero to 0.25 percent.
