NEW YORK (Reuters) - The Federal Reserve's balance sheet contracted for first time in three weeks, prompted by a moderate decline in its bond holdings, Fed data released on Thursday showed.
The Fed's balance sheet - a broad gauge of its lending to the financial system - stood at $2.849 trillion on April 25, down from $2.858 trillion on April 18.
The Fed's holdings of Treasuries totaled $2.610 trillion as of Wednesday, versus $2.623 trillion the previous week.
The Fed's overnight direct loans to credit-worthy banks via its discount window averaged $8 million a day during the week, more than the $6 million a day average rate the prior week.
The Fed's ownership of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and the Government National Mortgage Association (Ginnie Mae) was $847.8 billion, down from $855.36 the previous week.
The Fed's holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank system totaled $94.57 billion, down from $95.20 billion the previous week.
(This has been corrected to change headline to show Fed balance sheet shrinks, not grows)
(Reporting by Richard Leong; Editing by Padraic Cassidy)
