Fed's Mester Says Fed Balance Sheet Rundown Can Happen Independent Of Federal Funds Rate Moves
Portfolio Pulse from Benzinga Newsdesk
Loretta Mester, President of the Federal Reserve Bank of Cleveland, stated that the Federal Reserve's balance sheet reduction could proceed independently of changes to the federal funds rate. This suggests that the Fed may continue to reduce its balance sheet even if interest rate adjustments are paused or reversed, indicating a continued focus on tightening monetary policy to combat inflation.
November 29, 2023 | 7:24 pm
News sentiment analysis
Sort by:
Ascending
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) could experience volatility as investors react to the Federal Reserve's balance sheet reduction plans, which may proceed regardless of federal funds rate changes.
While the SPY ETF is a broad representation of the market and not directly tied to Fed policy, Mester's comments could influence investor sentiment and market volatility. The balance sheet reduction is part of the Fed's tightening measures, which generally lead to higher yields and can pressure stock prices. However, the impact may be muted if investors have already priced in the Fed's policy path.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70