20 March | Dollar

Bloomberg: Fed to slow balance sheet reduction next month

Bloomberg: Fed to slow balance sheet reduction next month

Starting April 1, the Federal Reserve (Fed) will slow its balance sheet reduction by lowering the monthly limit on Treasuries that can be redeemed without reinvestment from $25 billion to $5 billion. The limit on mortgage-backed securities will remain at $35 billion, according to a report by Bloomberg.

The decision comes as lawmakers work to reach an agreement on raising the national debt ceiling, which the country hit in January. Until the issue is resolved, the Fed plans to stay flexible, potentially slowing or suspending its balance sheet reduction, the agency said.

Despite this move, the size of the balance sheet will remain unchanged in the medium term, Federal Reserve Chair Jerome Powell stated.

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