Investing.com – Boston Fed President Eric Rosengren said on Wednesday, the Federal Reserve should start to shrink its balance sheet “relatively soon” but take a gradual approach to ensure planned rate hikes remained on track.
"By initially retiring only a small percentage of maturing securities, and then very gradually shrinking the volume of the securities being reinvested, the tightening of short-term interest rates should not need to be much different than it would be in the absence of shrinking the balance sheet," said Rosengren.
The comments echoed the message from the Federal Reserve’s minutes of its March meeting, after the U.S. central bank said a reduction in its balance sheet would likely come into effect later this year, and added that two additional rate hikes remained on the agenda.
Mr Resengren’s comments drew a muted reaction from markets.
The U.S. dollar index remained little changed at 99.64, up 0.24%.
Gold futures traded at $1,283.50 while Treasury yields dipped briefly, with the U.S. 10-Year at 2.209, up 1.37%.
The Dow Jones Industrial Average traded at 20446. The S&P 500 traded mostly flat while Nasdaq Composite added 0.26% to 5864.29.