FOMC Minutes: Shrinking of Balance Sheet Could Begin this Year

Fed officials expressed that they anticipate the reduction of the $4.5 trillion portfolio to begin later this year as interest rates continue to increase, according to the minutes of the meeting released today.

“Most participants anticipated that gradual increases in the federal-funds rate would continue and judged that a change in the (Fed’s) reinvestment policy would likely be appropriate later this year,” the minutes said.

The minutes showed most Fed officials in support of a gradual path of rate hikes, but open to a quicker pace if the economy heats up more than anticipated. On the more aggressive side were some of the hawks, arguing for a faster pace of hikes with the Fed near its 2% inflation goal.

On the topic of fiscal policy, the Fed officials do not expect any of President Trump’s expansionary policies to begin until 2018.

The next policy meeting will take place May 2-3, 2017.

Read the FOMC Minutes.