Fed plans to end $4-trillion portfolio runoff later in 2019, says Powell
As recently as a few months ago it had expected to keep shrinking its balance sheet for another couple of years
Washington — The Federal Reserve will stop shrinking its $4-trillion balance sheet later in 2019, Fed chair Jerome Powell said on Wednesday, ending a process that investors say works at cross-purposes with the Fed's pause on interest-rate hikes. "We’ve worked out, I think, the framework of a plan that we hope to be able to announce soon that will light the way, all the way to the end of balance sheet normalisation," Powell told members of the House financial services committee in what were his most detailed remarks to date on the subject. "We going to be in a position ... to stop runoff later this year," he said, adding that doing so would leave the balance sheet at about 16% or 17% of GDP, up from about 6% before the financial crisis about a decade ago. The US GDP is currently about $20-trillion, suggesting the Fed's balance sheet would be between $3.2-trillion and $3.4-trillion. The Fed has been trimming its balance sheet — bulked up by trillions of dollars of bond-buying during t...
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