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Runoff Cap Size And Ramp Up Period Vs Expectations

FED

* Cap size: $95 bln/month cap for asset runoff likely appropriate -- sell-side analyst expectations around a $90-100B terminal monthly pace

* Cap size ramp-up period: 3 months or modestly longer -- 3 months expected.

* Bills: “Several” participants thought cutting T-bill holdings would be appropriate but “most” participants thought the runoff should focus on coupons (i.e. those Treasuries with interest payments, not T-bills). Most participants judged that it would be appropriate to redeem coupon securities up to the cap amount each month and to redeem Treasury bills in months when Treasury coupon principal payments were below the cap -- only a couple analysts saw bills being allowed to run off the balance sheet.

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