On March 20th, Federal Reserve Chairman Powell stated that the inflow and outflow of funds from the Treasury Department’s TGA have prompted the Fed to consider reducing its balance sheet. This is a good time to slow down the reduction of the balance sheet, and the decision to slow down the reduction has not sent any signals. Slowing down the contraction means that this will happen at a slower pace, but for a longer duration. The Federal Reserve will stop this process when the balance sheet is reduced to slightly above the sufficient level; There is still a long way to go from that level, and the speed will be slower when approaching that level. TGA accounts are decreasing and reserve levels are increasing, which makes the underlying signals unclear. And it is stated that there are currently no plans to slow down the reduction rate of MBS holdings. The reduction of MBS holdings may or may not be stopped; The Federal Reserve has not yet made any decision. Strongly hope that MBS will exit the Federal Reserve’s balance sheet; We will carefully consider whether to allow MBS to exit after stopping the scale reduction.
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