The Fed Has a Lot of Questions to Answer About Its Balance Sheet
- Officials will have an in-depth conversation on QT this week
- Fed likely to discuss when and how to taper asset runoff
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The Federal Reserve will begin in-depth discussions about its balance sheet this week, including when and how to slow the pace at which the central bank drains excess cash from the financial system.
At the heart of this debate is how much more policymakers can shrink the Fed’s $7.5 trillion portfolio of assets before worrisome cracks — similar to those seen in 2019 ahead of an acute funding squeeze — start to appear.