Union Bank of Switzerland’s analysis team are expecting that the US Fed’s quantitative tightening (QT) program could come to an end this year, according to the minutes of the central bank’s January meeting.
Key Quotes
“We don’t think Fed’s QT program is likely to be a significant direct drag on global economy & markets. For a start, Fed’s balance sheet reduction represents only a partial reversal of post-2008 stimulus.”
“We expect Fed assets, which expanded from USD 900bn pre-crisis to a peak of USD 4.5tr in 2017, to fall back only modestly to USD 3.5tr.”
“Added to this, since investor demand for liquidity has fallen as investors feel safer, there is less danger that QT would cause liquidity to dry up or inflation to fall sharply.”
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