Fed to start reducing $4.5 trillion balance sheet
The Federal Reserve said Wednesday that the U.S. economy is strong enough for the central bank to begin reducing its $4.5 trillion balance sheet in October, gradually unwinding a massive stimulus program started after the economy entered a severe recession nearly a decade ago.
The Fed will scale back its holdings by $10 billion in October and raise that amount gradually in the months to come. After the 2008 financial crisis and ensuing recession, the Fed took the unprecedented step of beefing up its holdings of government bonds and mortgage-related securities from $900 billion to $4.5 trillion in an effort to turn the economy around.
That kept interest rates artificially low for the past nine years. The Fed’s future actions on interest rates will go a long way toward how much Americans pay to borrow — whether it’s for a mortgage, a car or next month’s credit card bill.
According to the Fed, the U.S. economy keeps getting better. Consumers continue to spend, and business investment is “picking up,” the Fed said. It now projects even faster growth this year of 2.4 percent, an increase from it forecast of 2.1 percent earlier this year.
Read more: http://www.thegazette.com/subject/news/business/fed-to-start-reducing-45-trillion-balance-sheet-20170920
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