Wells Fargo analysts suggest that US Fed’s shrinkage of balance sheet will likely stop by the end of 2019 at a terminal size of roughly $3.6tri, with about $1.1tri in excess reserves.
Key Quotes
“Starting next year, we expect balance sheet to start growing organically again, eventually reaching $5tri in 2029.”
“In terms of composition, we expect Fed’s holdings of Treasuries to rise roughly $175 billion in 2020 and $280 billion in 2021, with T-bills comprising about $50 billion and $80 billion of those totals, respectively.”
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