Question From MNI On If The Taper/Hikes Are Separate and Runoff

Q: (From MNI's Evan Ryser): Should we still see the taper and rate hikes as separate; also might the FOMC be able to start running off assets before rates were 1-1.25% as in the last cycle?

• A: Asset purchases are a separate tool from interest rates, stopping asset purchases does not remove accommodation, it stops adding further accommodation whereas interest rates start removing accommodation from a highly accommodative stance. The extent to which they'll be separated in time is something we haven't really discussed at the Committee yet. We will be discussing that obviously in coming meetings I don't think that the last cycle that was quite a long separation before interest rates, I don't think that's at all likely in this cycle. We're in a very different place.
• Re balance sheet runoff: "these are interesting issues to discuss" but the FOMC didn't make any decisions today. "We looked back at what happened in the last cycle and people thought that was interesting and informative, and but to one degree or another people noted that this is just a different situation. Those differences should inform the decisions we make about the balance sheet this time so haven't made any decisions at all about when runoff would start but we'll be continuing to, in relation to when either liftoff happens or the end of the taper but those are exactly the the situations we'll be turning to in coming meetings."