Alexa

Treasury to keep borrowing steady in 4th quarter

Treasury to keep borrowing steady in 4th quarter

The Treasury Department said Wednesday that it has cut back its annual borrowing capacity by $328 billion in the past year but plans to keep its borrowing steady for the next three months.
Treasury officials said that uncertainty over future tax policy and about the economy will likely keep borrowing steady in the final quarter of 2010. But the department could resume its reductions in borrowing next year, the officials said, according to minutes of an advisory committee meeting released Wednesday.
The department has been scaling back its borrowing after vastly expanding it to fund record deficits in 2009 and 2010. The deficit reached $1.3 trillion in 2010, down from a record-setting $1.42 trillion in budget year 2009. The deficit may climb back to $1.4 trillion in the current fiscal year, according to the Obama administration, but private forecasters expect it will decline slightly.
The department said earlier this week that it will borrow $362 billion in the current quarter. That's down from an estimate of $380 billion in August.
The Federal Reserve is expected to announce later Wednesday that it will begin purchasing Treasury securities in an effort to lower long-term interest rates. The central bank hopes that lowering those rates will spur more borrowing and spending. The Treasury's decision to maintain the size of its debt auctions is unrelated to the Fed's potential decision, a Treasury official said.
Treasury also said that it will offer more inflation-indexed securities, known as TIPS, to meet demand. Treasury plans to hold a TIPS auction every month and will also hold extra auctions of 5-year and 30-year TIPS.
The department also said Wednesday that it will auction $72 billion in long-term debt next week, including $32 billion in a three-year note next Monday, $24 billion in a 10-year note on Tuesday, and $16 billion in a 30-year bond on Wednesday, Nov. 10.