Fed: Balance sheet reduction to get underway shortly - ANZ

Analysts at ANZ think that Fed’s balance sheet reduction looks set to get underway shortly, and arguably irrespective of the upcoming data flow.

Key Quotes

“Minneapolis Fed President Kashkari touched on a few of the dynamics markets are grappling with right now. He is a known dove of course, so it is of little surprise that the latest soft inflation figures have worried him. But regardless, he still seems on board with the idea of balance sheet normalisation, saying that “I think the big, big balance sheet isn’t doing a lot to boost the economy right now.” In the balance between rate hikes and balance sheet reduction, the former appears to on hold for now, while the latter looks set to get underway shortly, and arguably irrespective of the upcoming data flow.”