The Federal Reserve is expected to cut down its balance sheet as soon as the next month, according to Governor Lael Brainard. QQQ is down 1.63%.
- Brainard, in a prepared speech, said the Federal Open Market Committee will start to shrink its balance sheet “at a rapid pace” as soon as its meeting next month.
- She said the balance sheet is expected to be reduced considerably “more rapidly” than previously, amid the stronger recovery versus the earlier cycle.
- Brainard cited significantly larger caps and a shorter period which will phase in the maximum caps versus those seen in 2017 to 2019.
- The reduction in the balance sheet is set to contribute to the tightening beyond the anticipated hikes reflected in market pricing.
- The FOMC will also continue with its monetary policy tightening, with a series of rate hikes already set.