When the Federal Reserve has finally “normalized” its balance sheet, allowing much of the $4.25 trillion in Treasuries and agency securities that it acquired through quantitative easing to gradually run off, there will still be as much as $1 trillion on the ledger, according to Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee last week.
After a year and a half of following its carefully scripted plan to normalize its balance sheet and return to good, old-fashioned monetary policy, the Federal Reserve muddied the waters at last week’s meeting of the Federal Open Markets Committee.
Speaking at a public forum recently, Federal Reserve Chair Jerome Powell said the Fed will continue to offload the massive $4 trillion portfolio it acquired through quantitative easing in the wake of the housing crisis.