Fed plans October start for 'gigantic' balance sheet reduction

Yellen hopes unwinding will be like 'watching paint dry'

The Federal Reserve is to start paring back its multi-trillion dollar balance sheet next month, in an historic move that will see the unwinding of the quantitative easing programme launched amid the 2008 global financial crisis.

As expected the Federal Open Market Committee (FOMC) kept rates on hold at a range of 1% to 1.25%, but also announced it will begin the unwinding of the stimulus programme it began close to a decade ago on hopes the US economy will continue to "perform well". In October, the Fed will begin reducing its $4.5trn portfolio in bonds by stopping reinvesting the proceeds of maturing debt accumulated through the various QE programmes.  SocGen's Edwards: Fed will be forced into 'more pronounced' tightening than market expects It is hoped the runoff will see reductions in the tens of billio...