Nothing Is Guaranteed as the Fed Shrinks Its Balance Sheet

Barron’s, May 17, 2022–William English (subscription)
With the pandemic recession recovery fairly complete and inflation running well above target, the Fed announced it would start reducing its securities holdings in June. This shift to balance sheet normalization is appropriate, but given the elevated uncertainty about the outlook, investors should bear in mind that the Fed may need to make significant adjustments to its plans as the situation evolves.