economy

Goldman Sachs: Fed’s balance sheet likely to shrink in 2023

Goldman Sachs: Fed’s balance sheet likely to shrink in 2023

If the Federal Reserve accelerates winding down its asset buying as expected, the central bank will face even sooner the question of what to do with its $8.7 trillion balance sheet. In a note to clients on Tuesday, Goldman Sachs economists said they believe the Fed will wait a while before allowing its balance sheet to shrink. They forecast a fourth rate increase by the Fed in the first half of 2023, adding that “our best guess for now is therefore that runoff will begin around that time. They noted that research on balance sheet policy “implies that the impact of runoff on interest rates, broader financial conditions, growth, and inflation should be modest, much less than that of the rate hikes we expect. Download.

economy 2021-12-15 Livemint