The Fed's Balance Sheet Is Misunderstood
From bnnbloomberg.ca
The Federal Reserve finds itself in a tricky position with its balance sheet policy. Years of bond purchases via quantitative easing caused the central bank’s assets to swell from less than $1 trillion in 2008 to $4.5 trillion by the end of 2014 in an effort to provide financial accommodation to the economy. But now that the Fed has started to shrink those assets, to about $4 trillion as of last week, it is having a hard time convincing market participants that central bankers expect the ultimate size of the balance sheet will be primarily determined by technical rather than economic conditions. Hence, a slowing or ...
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