May 24, 2024

Most at Fed Want Rate Increases Before Asset Sales

During an extensive discussion of how the central bank might pull back its massive support for the world’s largest economy, officials agreed they would eventually shrink the Fed’s much expanded portfolio over the medium term, and that getting rid of mortgage-related debt would be a priority.

“A majority of participants preferred that sales of agency securities come after the first increase in the FOMC’s target for short-term interest rates,” the Fed said, referring to the Federal Open Market Committee, its policy-making panel.

“And many of those participants also expressed a preference that the sales proceed relatively gradually,” returning Fed holdings to all Treasury securities “over perhaps five years,” the minutes said.

Discussion of the removal of monetary stimulus should not be seen as an indication the Fed is ready to start down that road any time soon, policy makers said.

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