The central bank should start whittling down its mammoth $4.5T balance sheet "relatively soon," says Boston Fed President Eric Rosengren. Getting this done sooner rather than later, he says, will allow the Fed to focus on short-term interest rates as a "primary mechanism" for policy changes.
The balance sheet actions probably aren't a one-time event, says Rosengren, as the Fed's current 3% long-run forecast for the Fed Funds rate suggests ZIRP will come again at some point in the future ... and with ZIRP could come another bout of QE.
The 10-year Treasury yield today is up three basis points to 2.20%.
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