NEW YORK (Reuters) - The U.S. Federal Reserve, which has amassed some $4.5 trillion in bonds since the recession, could begin trimming that portfolio after this year’s raft of interest-rate hikes and will aim to keep cutting it for “a number of years,” a Fed official said on Wednesday.
Some $2.5 trillion of that record total offsets excess reserves in the banking system.
However the U.S. central bank ultimately decides to shed the bonds, it will take place “in the background” yet still influence the pace with which the Fed continues to raise rates, said San Francisco Fed President John Williams. He added only that the portfolio will shrink to a level “significantly below” the current portion of excess reserves.
Reporting by Jonathan Spicer; Editing by Chizu Nomiyama