After the FOMC’s announcement on March 20 that the Fed would be concluding its reductions in the balance sheet in the coming months, the end of the first quarter 2019 marks a turning point for the balance sheet normalization. The caps in place in the fourth quarter 2018 and the first quarter 2019 will only continue into April. Starting in May, the cap on reductions of Treasurys will fall to $15.0 billion per month and in September will fall to $0.
In the mean time, in the first quarter the size of the Fed’s holdings fell about $112.0 billion to $3,774.6 billion as of March 26, down from $3,886.6 billion on December 26, 2018.
Chair Jerome Powell has said the size of the Fed’s holdings will likely be a bit above $3.5 trillion when the reductions conclude in September. That looks about right at this time.
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