Central Banks
Fed’s Balance Sheet Unwinding Seen Taking Longer Than Expected, Wrightson Says
- Central bank’s next policy meeting commences on Tuesday
- Reverse repo facility shrinking faster than balance sheet
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The beginning of the Federal Reserve’s tapering of its balance sheet unwind is starting to look further off and more drawn out than some expect, according to Wrightson ICAP.
For the past year and a half, the Fed has been letting as much as $60 billion in Treasuries and as much as $35 billion in agency debt holdings mature each month. But, a debate has been simmering over whether the central bank is misjudging how much it can tighten without causing dislocations in places like the repo market, an essential part of the plumbing of the financial system.