The US Federal Reserve (Fed) has managed the balancing act for the time being: its boss Jerome Powell has very clearly announced the turnaround in monetary policy without frightening the markets too much. From November, if nothing dramatic happens by then, the Fed will begin to curb its bond purchases.
In the middle of next year, the acquisitions are to be reduced from the current 120 billion dollars per month to zero. It’s a pretty tight schedule. After that, only expiring papers are replaced, the balance sheet total remains stable.
The markets will quickly tick this first swing and then wait to see when the first rate hike in the US could come. Maybe that will happen in the coming year.
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