To guide expectations concerning the process of normalizing the size and composition of the Federal Reserve’s balance sheet, at its June 2011 meeting, the FOMC laid out what it called “exit principles.” In these principles, the FOMC indicated that asset sales would likely follow liftoff of the federal funds rate.
It also noted that, in order to minimize the risk of market disruption, the pace of asset sales during this process could be adjusted up or down in response to changes in either the economic outlook or financial conditions. For example, changes in the pace or timing of asset sales might be warranted by concerns over market functioning or excessive volatility in bond markets.