Powell says balance sheet drawdown taper coming soon

Powell: We may actually be able to get to a lower level because we would avoid the kind of frictions that might happen by shedding bonds too quickly. — AFP

WASHINGTON: The Federal Reserve (Fed) is nearing a decision on slowing the pace of its balance sheet run-off, says central bank chair Jerome Powell, a tapering move that may allow it to shed more bonds than it once expected.

Powell’s remarks, the most explicit so far about plans to slow a process that has seen about US$1.4 trillion of bonds roll off the Fed’s balance sheet, was seen by several Wall Street analysts as a signal that a tapering plan will be unveiled as early as the Fed’s next meeting on April 30-May 1.