Fed announces reduction in balance sheet runoff pace
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The Federal Reserve announced plans on Wednesday to slow the speed of its balance sheet drawdown, after having spent much of the earlier part of the year warning of this shift. The Fed said that starting on June 1 it was reducing the cap on Treasury securities it allows to mature and not be replaced to $25 billion from its current cap of up to $60 billion per month. The Fed left the cap on how many mortgage-backed securities it will allow to roll off its books at $35 billion per month, and it will reinvest any excess MBS principal payments into Treasuries. The move was announced at the end of its two-day Federal Open Market Committee meeting, at which the U.S. central bank left interest rates unchanged. The downshift in the pace of the runoff had been widely expected, although market participants weren't sure whether the tapering of the runoff process would happen at this week's FOMC gathering or the one scheduled for June. Fed ...