FOMC may delay drawdown’s start if debt ceiling upsets markets - BBG

Bloomberg carries an articles on Thursday, noting that, despite Fed’s indication that it would start-off balance sheet normalization process from September, a looming deadline for raising the government’s debt ceiling could end up disrupting the Fed’s plans.

Julia Coronado, president of MacroPolicy Perspectives LLC in New York, noted: “The baseline will be to start the balance-sheet runoff in September and pause on rates; and hike again in December if all goes well. But if the government runs into a debt ceiling problems, the FOMC could “tactically defer to November” to start reducing its big bond holdings.”

Also hanging over Wednesday’s meeting of the Federal Open Market Committee were remarks by President Donald Trump about whom he intends to nominate to be central bank chair when Yellen’s term expires in February, which could complicate Fed’s intentions further.