In its March statement, the FOMC reaffirmed its expectation that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the current asset purchase program ends and the economic recovery has strengthened.14 Accordingly, there will likely be a substantial period after asset purchases conclude but before the FOMC starts removing accommodation by reducing asset holdings or raising the federal funds rate.
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.