FED TO SHRINK MASSIVE CRISIS-ERA BOND PILE
The Federal Reserve will begin shrinking the enormous portfolio of bonds it amassed after the 2008 financial crisis in an effort to shore up the economy. The move reflects a strengthened economy and could mean higher rates on mortgages and other loans over time.
The Fed said it will let a small portion of its $4.5 trillion balance sheet mature without being replaced, starting in October with reductions of $10 billion a month and gradually rising over the next year to $50 billion a month.
The central bank left its key short-term rate unchanged but hinted at one more hike this year, most likely in December. The Fed policymakers' updated economic forecasts show an expectation for three more rate increases in 2018.
At a news conference, Chair Janet Yellen said the Fed's two rate hikes this year and its decision to begin reducing its bond holdings were signs of a solid economy and job market.
“The basic message here is U.S. economic performance has been good,” Yellen told reporters.