Interest rates in the US have been at or near record lows for the last several years.
The US Federal Open Market Committee, which sets the level of short-term interest
rates, has consistently kept overnight lending rates at zero in an effort to allow
the economy to heal, businesses and consumers to reduce their debt burdens and
the housing market to stabilise. In addition to keeping short-term rates at all-time
low levels, the Fed increased the size of its balance sheet through what they term LargeScale Asset Purchases, better known as Quantitative Easing.
By purchasing large amounts of US Treasuries and Agency
Mortgage Backed securities, they were attempting to help
suppress longer-term interest rates in an effort to spur the
economy. The debate over whether this has had any tangible
effect will go on for many years in academic circles, but we
do know from experience that the economic recovery from
the deep recession caused by the financial crisis, has been
the slowest in post-war history.
The Federal Reserve will not, however, always be the
largest purchaser of Treasuries, expanding their balance
sheet to infinitely lofty levels; ѡ