Official warns Fed balance sheet shrinking will be rapid

$9trn balance sheet

The Federal Reserve will begin a “rapid” reduction of its $9trn balance sheet as soon as next month according to Lael Brainard, who sits on the Fed’s board of governors and is awaiting confirmation to become its next vice-chair, the FT has reported.

In a speech yesterday, Brainard warned that the Fed was willing to take "stronger" action to bring down inflation, adding that tackling the issue was the central bank's "most important task". Her comments caused a drop in the US market as investors worried about the effects of higher interest rates, with the Dow losing 200 points and 10-year Treasury yields growing to a new 2022 high. "It is of paramount importance to get inflation down," she said in a speech delivered at a conference hosted by the Fed's Minneapolis branch. "Accordingly, the committee will continue tightening monetary...