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Surprise "Principles" On Runoff, Details Thin

The Fed's statement on "Principles for Reducing The Size of the Federal Reserve's Balance Sheet", a summary - fairly vague, plenty of details to fill in on pace/timing/reinvestments etc and thus plenty of questions for Powell in a half hour. But def a signal that the FOMC is further ahead than perhaps thought on balance sheet reduction:
  • Affirms that the Fed funds rate is the primary means of adjusting monetary policy
  • Confirms timing/pace of runoff will be determined; FOMC expects that balance sheet reduction will commence after raising rates
  • FOMC intends to reduce holdings over "time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account"
  • Intends to "maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively in its ample reserves regime."
  • Intends to "intends to hold primarily Treasury securities in the SOMA"
  • And "The Committee is prepared to adjust any of the details of its approach to reducing the size of the balance sheet in light of economic and financial developments."

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