Fed Vice Chair Jefferson Says It Is Appropriate To Return To A More Normal Balance Sheet; Banking System Reserves Are Still Abundant; No One Knows Exactly What Size Balance Sheet Will Need To Be; Gradual Approach Allows Fed To Shrink Holdings With Low Risk Of Stress; Is Very Much Guided By Dual Mandate
Portfolio Pulse from Benzinga Newsdesk
Fed Vice Chair Jefferson stated that it is appropriate to return to a more normal balance sheet, noting that banking system reserves are still abundant. He mentioned that no one knows the exact size the balance sheet will need to be, and a gradual approach will allow the Fed to shrink holdings with low risk of stress.
May 20, 2024 | 2:59 pm
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POSITIVE IMPACT
The Fed's gradual approach to shrinking its balance sheet with minimal stress is likely to maintain stability in the broader market, which could positively impact SPY in the short term.
A gradual reduction in the Fed's balance sheet with an emphasis on minimizing stress is likely to maintain market stability, which is beneficial for broad market ETFs like SPY.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80