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US Fed's US$8 trillion balance sheet will only grow

Lisa Abramowicz
Lisa Abramowicz8/12/2021 1:41 PM GMT+08  • 3 min read
US Fed's US$8 trillion balance sheet will only grow
Don’t expect the Federal Reserve to materially shrink its balance sheet for quite some time.
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Don’t expect the Federal Reserve to materially shrink its balance sheet for quite some time.

Analysts and economists are coming to the conclusion that US central bankers will keep slowly expanding their US$8.2 trillion ($11.08 trillion) stockpile for the foreseeable future, even if the economic recovery stays on track and they start to pare back their US$120 billion monthly bond purchases.

Societe Generale’s Subadra Rajappa could see a US$1 trillion boost to the assets already held by the Fed within the next 12 months, even with a taper on asset buying. Steven Ricchiuto, chief US economist at Mizuho Securities, said he expects the Fed to keep expanding its books at the pace of nominal gross domestic product, even after it stops its latest round of quantitative easing.

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