![]() With the Fed judging economic and financial conditions as appropriate for rate normalization, maturing securities under a cap have been allowed to roll off the balance sheet since October 2017. The Fed has since begun to reduce its holdings of Treasuries and Mortgage Backed Securities at a gradual pace, as seen in the chart below. ![]() Recall that as part of the Fed’s crisis-fighting toolkit, the Fed undertook a massive expansion of its balance sheet (dubbed Quantitative Easing) in the post-crisis years. Market participants also welcomed guidance on the FOMC’s plans for future balance sheet normalization.
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