Inflation data is the most important indicator that affects the central bank’s monetary policy.
US Fed could stop reinvestment policy this year
The Fed could start winding down its massive balance sheet a bit later in 2017 in a shift, which would make it less necessary to lift the official funds rate, as a US major banker revealed on Monday.
In an interview to reporters in Australia, St. Louis Federal Reserve President James Bullard told that views differed within the major US institution on ending its balance sheet reinvestment policy and it would require some time to agree on, though he felt it could start later in 2017.
Bullard stressed that the major bank wouldn’t be selling assets from its $4.5 trillion balance sheet. It also doesn’t intend to replace them as they’re maturing
It could be well accommodated by financial markets and also would apply limited upward pressure on Treasury yields.
Financial experts surveyed by Reuters and by the Fed itself had mostly expected the process to start in 2018.
Bullard added he personally favored only one more interest rate lift in 2017 and emphasized that ending bond reinvestment could be as a replacement for rate lifts.
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