Posted on 04/05/2017 3:23:11 PM PDT by Oldeconomybuyer
Federal Reserve officials said the shedding of the $4.5 trillion in bonds the central bank is holding on its balance sheet will begin this year.
The revelation came Wednesday from a summary of the Federal Open Market Committee meeting held in March, during which the group approved a quarter-point hike in its benchmark interest rate target. Officials at the meeting noted that the Fed likely is on a faster pace with rate hikes ahead.
Unwinding the balance sheet is significant both because of its sheer size and the impact it could have on markets, as Fed members including Chair Janet Yellen have indicated that the move itself would amount to a rate hike.
"Provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the Committee's reinvestment policy would likely be appropriate later this year," the summary, or minutes, said.
(Excerpt) Read more at cnbc.com ...
I have feared that the Fed will unleash policies intended to destroy Trump.
AM I correct in my assumption that this means recalling 4.5 trillion in Federal Reserve Notes and Credits from the Monetary System?? Deflationary, in other words??
If so, Then that is a Good Thing, consider the amount of Inflation(THEFT OF VALUE)we have had since that fateful day August 15, 1971.
No. My understanding is that the Fed will be letting some of the bonds it holds mature and not be replaced. It is possible for this to be deflationary, but that is unlikely.
Yep. Funny they didn’t worry about it until now.
Fascinating that the bond market, which had been down before the Fed Minutes, rocketed higher.
STATISTICAL ANOMALY
QE coming back to bite us!
As I understand it, these are US government bonds that the US government could not sell so the US government bought them. The mother of all ponzie schemes. They will have to be discounted to sell.
Understanding that is beyond my pay grade.
"Feared"???
It was a foregone conclusion.
Democrats get a twofer; they will damage Trump and damage America at the same time.
What's not for the haters to love? ;-)
I hope this unwinding goes better then the unwinding of derivatives in 2007.
Ping
The Anti Trump Fed move the Market down over 200 Points talking about not to do tax cuts unheard of by the Fed
The Anti Trump Fed move the Market down over 200 Points talking about not to do tax cuts unheard of by the Fed
No. The Fed just started buying bonds in the open market. The result was to drive prices up, and yields down, to levels not seen in decades.
Their intent was to lower interest rates on longer term bonds, and that’s what happened. It had nothing to do with the government not being able to sell the bonds.
However, if they try to unload them too fast, they will drive bond prices down, and interest rates up. I suspect bond prices have seen their highs and will be much lower in a couple of years because they’re only high because the Fed has bought so many over the past eight years, and now that’s apparently ended.
Interesting, thanks.
Post reads like gibberish.
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