Is it time for the Fed to contract its balance sheet?
from CFA Institute's Enterprising Investor
The Federal Reserve can keep their balance sheet at the current size (and keep the risk asset party going) or it can position itself to be able to hike rates — but it cannot do both. The Fed recently announced that purchases of agency mortgage-backed securities and U.S. Treasuries would fall to $35 billion per month. If they continue reducing their purchases by $10 billion per month, the incremental purchases should be finished by October. So what will happen?
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