Is it necessary to pay the Federal Reserve when the bond it holds matures?

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vassy
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Is it necessary to pay the Federal Reserve when the bond it holds matures?

Post by vassy » 31 Jul 2017 01:29

Hi,
Is it necessary to pay interest on the bond that the Fed holds? Suppose, in order to increase the money supply the Fed buys a bond of $1 billion in the open market. Now the bond is back to US government (The Federal Reserve). The US government (US Treasury) itself created the bond in first place. Hence I think it is not necessary to pay the interest/principal on that bond. Is this assumption correct?

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