16 May 2018 / US
Lowering the Fed balance sheet
In the light of rising inflation and a tightened labour market putting upward pressure on wage growth, it is unsurprising that some analysts now expect the Fed to lift rates a total of four times this year. At the same time, the Fed's long-term plan to shrink its unprecedently large balance sheet is in its sixth month. Janet Yellen and Jay Powell, the former and sitting Fed chairs, characterised moves on both these fronts as essential on the path towards policy normalisation after years of low interest rates and quantitative easing.