How the Fed Has Been Sneak-Tightening Notch by Notch
by Wolf Richter
WolfStreet.com
Dec 6, 2016
And it’s now hitting home.
The operative words have been “gradually” and “over time.” Just about all Fed governors use those or similar terms when they talk about removing “accommodation,” or tightening monetary policy, thereby gradually allowing the proverbial punch bowl to empty out, by refilling it each time a little less. That started in January 2015.
It is now happening on three levels: the dollar, interest rates, and even the Fed’s balance sheet – the one that everyone stopped looking at after QE Infinity ended.
As QE was breathing its last gasp, the Fed’s balance sheet reached $4,516.1 billion on January 14, 2015. Since then, the Fed has continued to buy Treasury securities and mortgage-backed securities to replace those that matured. So total assets, after a cursory look that made everyone happy, sort of remained the same:
The Rest…HERE
