Premiumby Seth Carpenter, chief economist at Morgan StanleyOver the years, I have had countless conversations about the Federal Reserve's balance sheet. The common view is that a larger balance sheet is easier policy, and a smaller balance sheet is tighter policy. The intuition is understandable. Quantitative easing lowered long-term rates and eased financial conditions. But reversing things does not have to be symmetric … at all.
Morgan Stanley Explains Why Shrinking The Fed's Balance Sheet "Doesn't Have To Be Symmetric... At All"
"We think the Fed could shrink its balance sheet by $1.5tr over the next few years. That headline number sounds large. The market implications may not be." - Morgan Stanley
66 words~1 min read
