Minutes Signal Fed to Shrink Balance Sheet by $95B/Month

The video discusses the Federal Reserve's plans for reducing its balance sheet and potential interest rate changes. The Fed may start reducing the balance sheet as early as May, with monthly treasury caps set at $60 billion and $35 billion for mortgage-backed securities. There is also a possibility of selling mortgage-backed securities, which could surprise the market. The Fed is debating between a 50 and 25 basis point interest rate increase, considering the uncertainty from Russia's invasion of Ukraine. Market reactions show stable yields, and the current plan is more aggressive compared to previous cycles, with higher caps and a faster start.

In what ways does the current balance sheet reduction plan differ from previous cycles?

What factors contribute to the Fed's decision to start balance sheet reduction sooner than in 2017?