Fed: Unwinding of balance sheet to begin soon – Lloyds Bank

The US central bank’s QE programme massively inflated its holdings of assets such as Treasuries and over time, the Fed wants to reduce these holdings to more ‘normal’ levels, explains the analysis team at Lloyds Bank.

Key Quotes

“The Fed has indicated that the process may start soon, possibly as early as September.”

“The Fed’s intention is to proceed very gradually to avoid a pronounced impact on markets or the real economy.”

“It plans to avoid outright asset sales but instead will bring to an end its reinvestment of maturing holdings.”

“The run-off will start at a rate of $10bn per month eventually rising to $50bn.”