The Ratchet Effect on the Fed’s Balance Sheet

Source: Independent Institute
by Paul Mueller

“Pay no attention to the balance sheet behind the curtain. In the wake of the recent Federal Open Market (FOMC) meeting, few people are talking about the Fed’s balance sheet. While the FOMC took no action on their interest-rate target, they enacted a significant change to their quantitative tightening policy. This change tells us that the Fed is quite happy with the new normal of providing massive liquidity to markets with very little accountability.” (05/06/24)