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 mentioned that
we may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.He also noted that some signs have begun to emerge that liquidity conditions are gradually tightening.
- General firming of repo rates
- Temporary pressures on selected dates
Powell spoke at the National Association for Business Economics conference in Philadelphia, discussing the Fed's balance sheet, which holds over $6 trillion of securities.
Author's summary: Powell hints at slowing balance sheet reduction.