The Desk’s January Survey of Primary Dealers indicates that the median respondent expects the FOMC to purchase about $ trillion in securities over the course of 2013 and early 2014, roughly equally split between Treasuries and agency MBS. As a group interested in forecasting, you will appreciate that while individual survey respondents may provide a modal expectation for asset purchases – that is, the total amount that they think the FOMC is most likely to purchase – they also place probability on a variety of other outcomes. If a respondent is more uncertain about the economic outlook, the way the FOMC will respond to the outlook, or the Committee’s assessment of the efficacy and costs of purchases, he or she will place much higher odds on a wider range of outcomes for the size of the Federal Reserve’s portfolio. The Survey of Primary Dealers asks respondents about their individual forecast distribution about the size of the Federal Reserve’s portfolio in the future.5 These individual probability distributions can then be aggregated by simple averaging to form an estimate of the probability attached to different sizes of the Federal Reserve’s portfolio. The evolution of this probability distribution can be seen in Figure 1. As can be seen, the probability attached to a very small amount of purchases or a very large amount of purchases has come down over the last few months.
Simon M Potter: The implementation of current asset purchases Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Forecasters Club of New York, New York City, 27 March 2013. *  *  *  I would like to thank Katherine Femia and Linsey Molloy for help in preparing these remarks along with members of the Markets Group Staff for their comments and suggestions, including James Egelhof, Joshua Frost, Lorie Logan, Julie Remache, Roman Shimonov, and Nathaniel Wuerffel. These remarks are an expanded version of those given to the Annual Primary Dealers meeting on March 1. Thank you very much. It’s a pleasure to be here today to talk with you all about the Federal Reserve’s ongoing policy actions and the role of the Trading Desk (the Desk) at the Federal Reserve Bank of New York in implementing those policies on behalf of the Federal Open Market Committee (FOMC). As always, the views expressed here are my own and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Outcome-based purchases At the September 2012 FOMC meeting, the Committee decided to increase policy accommodation by purchasing an additional $ billion per month of agency mortgagebacked securities (MBS) and to continue the Maturity Extension Program (MEP). Then at its December meeting, the Committee decided to continue buying $ billion per month in longer-term Treasury securities following the completion of the MEP.