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JPMorgan economist sees Fed shrinking balance sheet starting 2018
March 30, 2017 / 6:52 PM / 9 months ago

JPMorgan economist sees Fed shrinking balance sheet starting 2018

NEW YORK, March 30 (Reuters) - A JPMorgan economist said on Thursday he expected the U.S. Federal Reserve to start paring the size of its $4.5 trillion balance sheet in early 2018 with a focus on ending its reinvestment in mortgage-backed securities.

“In our baseline projection, the Fed slowly phases out MBS reinvestments beginning in the spring of next year, never halts reinvestments of Treasuries, never sells MBS, and reaches its new optimal size of the balance sheet in early 2024, with excess reserves in the banking system of $500 billion,” JPMorgan economist Michael Feroli wrote in a research note. (Reporting by Richard Leong; Editing by Chizu Nomiyama)

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