Plans for Reducing the Size of the Federal Reserve's Balance ...

The Committee intends to reduce the Federal Reserve's securities holdings over time in a predictable manner primarily by adjusting the ... 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TheCommitteeintendstoreducetheFederalReserve'ssecuritiesholdingsovertimeinapredictablemannerprimarilybyadjustingtheamountsreinvestedofprincipalpaymentsreceivedfromsecuritiesheldintheSystemOpenMarketAccount(SOMA).BeginningonJune1,principalpaymentsfromsecuritiesheldintheSOMAwillbereinvestedtotheextentthattheyexceedmonthlycaps. ForTreasurysecurities,thecapwillinitiallybesetat$30billionpermonthandafterthreemonthswillincreaseto$60billionpermonth.ThedeclineinholdingsofTreasurysecuritiesunderthismonthlycapwillincludeTreasurycouponsecuritiesand,totheextentthatcouponmaturitiesarelessthanthemonthlycap,Treasurybills. Foragencydebtandagencymortgage-backedsecurities,thecapwillinitiallybesetat$17.5billionpermonthandafterthreemonthswillincreaseto$35billionpermonth. Overtime,theCommitteeintendstomaintainsecuritiesholdingsinamountsneededtoimplementmonetarypolicyefficientlyandeffectivelyinitsamplereservesregime. Toensureasmoothtransition,theCommitteeintendstoslowandthenstopthedeclineinthesizeofthebalancesheetwhenreservebalancesaresomewhatabovethelevelitjudgestobeconsistentwithamplereserves. Oncebalancesheetrunoffhasceased,reservebalanceswilllikelycontinuetodeclineforatime,reflectinggrowthinotherFederalReserveliabilities,untiltheCommitteejudgesthatreservebalancesareatanamplelevel. Thereafter,theCommitteewillmanagesecuritiesholdingsasneededtomaintainamplereservesovertime. TheCommitteeispreparedtoadjustanyofthedetailsofitsapproachtoreducingthesizeofthebalancesheetinlightofeconomicandfinancialdevelopments. Formediainquiries,e-mail[email protected]orcall202-452-2955 RelatedInformation FederalReserveissuesFOMCstatement LastUpdate: May04,2022