Lorie Logan, Speech: Federal Reserve Asset Purchases, The Pandemic Response and Considerations Ahead

Page(s): 8

“In summary, Treasury principal payments in coming years will be much larger and more variable than they were following the LSAP programs.  MBS principal payments will likely be modestly larger and are subject to considerable uncertainty.  The FOMC has not decided on its plans for reducing the size of the balance sheet.  However, the minutes from the December FOMC meeting noted that many Committee participants judged that monthly caps on redemption amounts could help ensure that the pace of reduction in the SOMA portfolio would be predictable over time.”

“And while the Fed has some experience shrinking its balance sheet, this process is still relatively novel.”