August 19, 2015
By Matthew Boesler
Federal Reserve policy makers (click here) discussed options for winding down the central bank’s balance sheet after a staff presentation at their July 28-29 meeting, according to minutes released Wednesday in Washington.
“Most participants expressed a preference that the timing of the cessation of reinvestments be based on a qualitative assessment of economic conditions and the outlook,” the minutes said.
The policy-setting Federal Open Market Committee must decide whether to reinvest $216 billion of proceeds from maturing Treasury securities in 2016, or shrink its balance sheet by allowing the debt to expire. By not reinvesting, the Fed would increase the supply of securities available to investors and put upward pressure on yields.
Shrinking the $4.2 trillion portfolio will add to the monetary tightening from increases in the benchmark interest rate officials envision for this year. That would mark a reversal of the easing the Fed achieved when it bought bonds in three rounds of so-called quantitative easing to speed a recovery from the worst recession since the 1930s....
By Matthew Boesler
Federal Reserve policy makers (click here) discussed options for winding down the central bank’s balance sheet after a staff presentation at their July 28-29 meeting, according to minutes released Wednesday in Washington.
“Most participants expressed a preference that the timing of the cessation of reinvestments be based on a qualitative assessment of economic conditions and the outlook,” the minutes said.
The policy-setting Federal Open Market Committee must decide whether to reinvest $216 billion of proceeds from maturing Treasury securities in 2016, or shrink its balance sheet by allowing the debt to expire. By not reinvesting, the Fed would increase the supply of securities available to investors and put upward pressure on yields.
Shrinking the $4.2 trillion portfolio will add to the monetary tightening from increases in the benchmark interest rate officials envision for this year. That would mark a reversal of the easing the Fed achieved when it bought bonds in three rounds of so-called quantitative easing to speed a recovery from the worst recession since the 1930s....
