These calculations require an assumption for market participants’ expectations for the future path of the Federal Reserve’s portfolio at different points in time, both in the past and going forward; accordingly, the estimates are somewhat sensitive to alternative assumptions for market  6  BIS central bankers’ speeches  pressure has had favorable spillover effects on other financial markets, leading to lower longterm borrowing costs for households and firms, higher equity valuations, and other improvements in financial conditions that in turn have supported consumption, investment, and net exports.
Because the term premium effect depends on both the Federal Reserve’s current and expected future asset holdings, most of this effect – without further actions – will likely wane over the next few years as the effect depends less and less on the current elevated level of the balance sheet and increasingly on the level of holdings during and after the normalization of our portfolio.