Pursuits
Fed's Cut in Bond Holdings May Be Messier Than Yellen Hopes
- ‘We don’t really know how’ it will go, Pimco’s Clarida says
- Treasury to have greater say than Fed in determining fallout
Janet Yellen
Photographer: Pete Marovich/BloombergThis article is for subscribers only.
Federal Reserve Chair Janet Yellen has said she wants to shrink the central bank’s $4.5 trillion balance sheet in an “orderly and predictable way” that limits risks to the economy. The hurdles are high to getting that done.
The economic impact, the pace of the drawdown and its ultimate end point are all partly subject to forces beyond the Fed’s control. That could mean that the financial markets and the economy may be in for more tumultuous times than Yellen and her colleagues are hoping for.