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Fed member sees balance sheet trimming in parallel with tightening

Published 04/06/2017, 11:20 AM
Updated 04/06/2017, 11:20 AM

Investing.com – Fed member John Williams sees trimming of the bank’s balance sheet in parallel with rate hikes.
Minutes of latest FOMC meeting showed most members backing Fed asset holding reduction before year-end.
The minutes said balance sheet normalization would be gradual and predictable.
The Fed’s balance sheet swelled to $4.5 trillion as part of efforts to revive the U.S. economy.
"It would make sense to take the next step in terms of starting normalization," Williams told reporters.
Williams said that move depends on the U.S. economy continuing to pick up.
The San Francisco Fed president said normalization would extend beyond rate tightening.
Williams expects two more rate hikes this year but does not rule out three if inflation picks up.
"The number of years we are thinking about is something like five years," he said.
He said Fed asset holdings could fall to around $2 trillion.

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