It seems likely that these shifts in expectations came as the FOMC’s communications became increasingly granular, particularly after the June meeting at which the FOMC provided detail on its balance sheet normalization plan. On net, it seems likely that expectations for the Federal Reserve’s overall stock of asset holdings were fairly stable over this time, despite variation in expectations for the timing and pace of eventual declines. Under the “stock view,” this stability in expected future asset holdings should result in limited changes in asset prices, as has been observed. Of course, as the balance sheet shrinks, some upward pressure on rates should be realized. Market participants’ estimate of this effect over two years is shown in Panel 8. 11 / 15  BIS central bankers' speeches  One last possible explanation for the stability of longer-term interest rates amid the movement toward balance sheet normalization has been the FOMC’s clear message that it would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate. Panel 9 shows the average of survey respondents’ probability distributions for the balance sheet; the left side shows this for the scenario where overnight rates remain away from zero, and the right side shows the adverse scenario in which they do return to zero. The right side shows a significant expansion in the balance sheet.
It is my hope that policy makers and financial service providers will utilise this information to develop strategies that will lead to the expansion and improvement of financial access for our people. BIS Review 115/2006  1  In Conclusion – May I emphasise that the nation is looking forward to the findings of the FinScope Zambia 2005 Survey which will help us fully understand the financial landscape in Zambia and therefore open up new market segments and allow us expand accessibility to financial services in Zambia necessary for reducing poverty. The report of the FinScope Zambia 2005 Survey will be posted to the Bank of Zambia website, www.boz.zm, for public information. Thank you. 2  BIS Review 115/2006