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In an effort to help fund its budget deficit, the Treasury Department may announce a plan on Wednesday to ramp up sales of inflation-protected bonds, the Wall Street Journal reported quoting people familiar with the matter.
China, already the largest holder of U.S. government debt, has reportedly evinced interest in buying more of these securities. China has accumulated more than $2 trillion in foreign-exchange reserves and has invested about $800 billion in Treasurys.
The WSJ report added that officials from the U.S. and China discussed TIPS issuance in Washington last week and China was assured by the U.S. that it remained committed to TIPS sales.
These securities, first sold in 1997, offer protection against inflation and pays out more as inflation accelerates, instead of offering a fixed interest rate. The announcement is likely to come as part of Treasury's scheduled announcement on funding for the third quarter, WSJ said.
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