Powell: Fed Could Soon Slow Balance Sheet Runoff
Federal Reserve Chair Jerome Powell stated that the Fed may be nearing a "somewhat ample" reserve level, suggesting an end to balance sheet reduction could be close.
Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve condition.
Powell told economists at the National Association for Business Economics conference in Philadelphia that the Fed is getting closer to reducing its $6 trillion securities holdings. He noted that some signs of tightening liquidity conditions have emerged, including firming repo rates and temporary pressures on selected dates.
Powell added that
we may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.
Author's summary: Powell hints at slowing balance sheet reduction.