In addition to raising rates, the FOMC further tightened monetary policy by ending asset purchases in March and then agreeing to start reducing our holdings of securities, a process that begins June 1. By allowing securities to mature without reinvesting them, the Fed’s balance sheet will shrink. We will phase in the amount of redemptions over three months.
By September, we anticipate having up to $ billion of securities rolling off the Fed’s portfolio each month. This pace will reduce the Fed’s securities holdings by about $ trillion over the next year, and the reductions will continue until securities holdings are deemed close to the ample levels needed to implement policy efficiently and effectively.