FT Alphaville: Reminder: A “normalised” Fed balance sheet won’t be normal-sized

Here’s another reminder, this time from New York Fed staffer Lorie Logan: While the Federal Reserve plans to cut the size of its balance sheet, it probably won’t end up shrinking that much.

Even before the Fed addresses the tougher questions — how it wants to control interest rates, and who it wants to trade with — the balance sheet should probably be around $2.1tn, Logan says. (For context, the Fed currently owns about $2.5tn of Treasuries and $1.8tn of mortgage-backed securities.)

The full article is available at https://ftalphaville.ft.com/2017/05/23/2189146/reminder-a-normalised-fed-balance-sheet-wont-be-normal-sized/

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