Fed’s Kaplan Says Balance Sheet Unwind Should Be Gradual

The video discusses the Federal Reserve's plans regarding interest rates and balance sheet normalization. It covers the timing and strategy for tapering, emphasizing a gradual approach to avoid market disruption. The need for announcements ahead of changes is highlighted, along with considerations for the future size of the balance sheet and the role of excess reserves in financial management.

What is the Federal Reserve's plan regarding the balance sheet runoff?

• To increase the balance sheet size

• To stop all operations

• To let securities mature without selling

• To sell securities immediately

How does the Federal Reserve plan to implement the tapering process?

• Gradually and with prior announcement

• By selling all securities at once

• Rapidly and without warning

• By increasing interest rates

When should the Federal Reserve announce its tapering plan?

• No announcement is needed

• After the process begins

• A few months before starting

• A few days before starting

What is the expected size of the Federal Reserve's balance sheet compared to eight years ago?

• Larger than eight years ago

• Twice as large as eight years ago

• Smaller than eight years ago

• The same as eight years ago

What is the current stance on maintaining excess reserves in the system?

• They should be reduced by half

• They should be maintained for now

• They should be doubled

• They should be eliminated immediately