Powell Says Fed Confronts Growing Risks
Federal Reserve Chair Jerome Powell stated that the central bank may soon halt reductions in the size of its $6.6 trillion balance sheet, hinting at an end to monetary tightening.
In 2020, the Fed implemented quantitative easing to stimulate borrowing during the pandemic, expanding its assets to nearly $9 trillion. By 2022, as the economy showed signs of stability, the Fed began trimming assets by allowing bond holdings to roll off the balance sheet.
Powell said the Fed may soon stop draining bank deposits from the financial system by halting reductions in the size of its $6.6 trillion balance sheet.
The Fed's potential halt on balance sheet reductions comes as it confronts growing risks of higher inflation and unemployment.
Author's summary: Powell hints at ending monetary tightening.
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