The Federal Reserve is maintaining the pace at which it’s reducing bond holdings, even as officials say it will be appropriate to slow the pace of the unwind fairly soon. The Fed has been winding down its holdings since June 2022 — a process known as quantitative tightening, or QT — and gradually increasing the combined amount of Treasury and mortgage bonds it allowed to run off, without being reinvested, to a total of $US95 billion per month.
Chairman Jerome Powell, speaking to reporters after the Fed’s decision on Wednesday , said moves to eventually stop shrinking the balance sheet will be consistent will previously issued plans. “The decision to slow the pace of runoff does not mean our balance sheet will shrink, but allows us to approach that ultimate level more gradually,” he said. “In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility of money markets experiencing stress.
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Source: FinancialReview - 🏆 2. / 90 Read more »