Fed faces balance sheet dilemma as U.S. economy slows

NEW YORK – With the recent slowdown in inflation, theFederal Reserve is faced with a conundrum ahead of a plan next month to double the rate at which it is shrinking its massive $8.9- trillionbalancesheet.

The move to accelerate quantitative tightening (QT), as it’s referred to, is meant to further drain pandemic-era stimulus from the financial system and increase borrowing rates for long-dated assets to weaken inflation. But that is taking place as theU.S. central bank pushes ahead with interest rate hikes to tame stubbornly high inflation, which is currently running at more than three times theFed’s 2 percent target.

The double tightening, however, makes it harder for theFedt…

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