FOMC: Balance Sheet Reduction to Begin ‘Soon’

At its meeting that concluded yesterday, the Federal Open Market Committee said it plans to begin “relatively soon” to reduce the Fed’s balance sheet, which is swollen with $4.5 trillion in securities purchased as part of quantitative easing programs between 2008 and 2014.

According to a statement from the FOMC released yesterday, the committee said it expects to begin the process “provided that the economy evolves broadly as anticipated.” At their previous meeting in June, the committee agreed to publicly communicate the plan once it has been agreed upon.

FOMC members decided at the same meeting to maintain the target federal funds rate of 1 to 1.25 percent, saying they expect “moderate” economic growth and continued job gains in the near term.

The statement noted that the labor market has continued to strengthen with solid job gains and expanding household spending and business fixed investment. According to the FOMC, overall inflation and the measure excluding food and energy prices have declined, running below the Fed’s 2% target rate.

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