The US Federal Reserve faces a monetary-policy challenge above and beyond determining the right level of short-term interest rates: how much and how quickly to reduce the more than $7 trillion in securities still on its balance sheet — holdings it amassed in previous years to help stimulate growth.

Back in September 2019, such quantitative tightening didn’t end well. Money markets buckled and short-term interest rates spiked as banks suddenly found themselves short of cash reserves. I expect that experience will make the central bank more careful this time.

QOSHE - Have No Fear of the Fed’s $7 Trillion Stash - Bill Dudley
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Have No Fear of the Fed’s $7 Trillion Stash

7 0
17.01.2024

The US Federal Reserve faces a monetary-policy challenge above and beyond determining the right level of short-term interest rates: how much........

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