The Federal Reserve Should Soon Provide More Details on the Cuts to Its Balance Sheet

The Federal Reserve’s (Fed) balance sheet has been shrinking slowly since the fall of 2017, and the markets are wondering how far the Fed will go. Until very recently, the Fed had been fairly quiet on the subject, suggesting it would stay on autopilot for quite some time. At January’s monetary policy meeting, however, it said that it will be more flexible in managing its balance sheet, and intimated that more guidance would be forthcoming.1