Boring Is In Vogue at Fed as Balance-Sheet Plan Comes Into View
- ‘Baby-step’ approach to shrinking holdings prevailed in May
- Minutes show officials coalescing around a plan for run-off
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Federal Reserve policy makers are coalescing around a plan for reducing the central bank’s $4.5 trillion balance sheet. The goal: smaller holdings and bored bond traders.
Nearly all officials at the Federal Open Market Committee’s May meeting approved of a strategy to cap the initial reduction at a “low” level and then gradually increase it every quarter, according to the minutes of the gathering released on Wednesday. Runoff would start later this year. It would be simple to communicate, and it would be on autopilot.