Fed: Three governors consider balance sheet could decline considerably

Matías Salord FXStreet

Reuters reported that the three newest Federal Reserve governors, Vice Chair Philip Jefferson, Lisa Cook and Adriana Kugler told US Senator Rick Scott in a letter that it is unclear how much further the Fed’s balance sheet wind-down process will run. They explained the process faces no imminent end.

"The size of our balance sheet ultimately will depend on the public's demand for our liabilities, particularly currency and reserves and we cannot specify in advance what that demand will be, hence we are not targeting any particular dollar value for our balance sheet," the letter said according to Reuters.

The governors consider that “under plausible assumptions, the size of the balance sheet could decline considerably further before reserves reach the level consistent with the ample reserves operating framework."

Market reaction

The US Dollar is posting mixed results on Thursday, holding firm with weekly losses as market participants consider that the Federal Reserve is done raising interest rates. The DXY is down by 0.10% at 104.30.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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