Free Trial

Long-Run Balance Sheet Estimates Are Indicative, Not A Roadmap


The NY Fed's balance sheet projections released Tuesday as part of its annual Open Market Operations report garnered some attention as they appeared to suggest that the SOMA portfolio could hit $9trn (or just under 40% of GDP) by end-2022 at the current pace, remaining at that size through 2030. Reserves are set to peak at $6.2trn by end-2022 but then decline.

  • Last week, the SOMA totalled $7.3trn, with reserves of $3.8trn, implying that reserves will grow faster than asset holdings - +$1.7trn vs $2.4trn).
  • After 2022, the size of SOMA/reserves would be determined primarily by FOMC policy, and a range of possibilities for asset size by 2030 is between $6.6trn-$9.0trn. The higher figure would fall as a % of GDP over time as the economy grows, to 28%.
  • Reserves are set to reach their "long run level" before end-2029, at which time SOMA resumes growth "to ensure a sufficient supply of reserve balances".
  • These estimates should purely be considered indicative and not a roadmap - in the previous year's report, projected SOMA holdings were seen at around $6trn by 2030 in the baseline outlook, with reserves reaching just over $2.2trn total - both of which were eclipsed almost a decade early.

Source: NY Fed

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.