Top Fed officials have shown no inclination to slow the pace of the reduction of the central bank‘s balance sheet, overturning outside observers’ assertion that money market conditions will bring the unwinding to an early end.
Fed Chair Jerome Powell and New York Fed President Williams, who manages the program, both said this week about plans to shrink their $8.6 trillion asset portfolio by allowing $95 billion in U.S. Treasuries and mortgage-backed securities (MBS) to mature each month. There is currently no reason to slow down.
Fed officials did not say how much they wanted to reduce their holdings or how long the process might take. But some analysts believe bank reserve levels will fall next year and the Fed will be forced to slow or even stop tapering.
