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by StClaire
2234 days ago
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There is. When the Fed buys bonds they get the coupon payments for those bonds and they can wipe the money off the books then if they want. They can also sell the underlying bond if they want to remove the cash from the economy immediately. And--since they got a good deal by buying when the market was down--they can afford to sell a little below what the same bond would currently trade at and fixed income investors will line up around the block to buy |
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Assuming the price goes back up later, you mean. But if that were guaranteed then the price wouldn't have been down much in the first place. It could stay down, or even go lower, in which case the Fed will lose money when they go to sell.