NEW YORK, April 17 (Reuters) - The Federal Reserve’s balance sheet contraction will likely see the central bank shed between $1 trillion and $1.5 trillion before coming to a stop, depending on the financial system's need for bank reserves, a report released on Wednesday by the Federal Reserve Bank of New York said.
“Future financial and economic conditions and their impact on the demand for reserves and the balance sheet are highly uncertain,” the bank said in its annual report for the central bank’s System Open Market Account, which is the Fed’s stock of cash and bonds held primary to conduct monetary policy.
The Fed is currently shrinking its bond holdings as part of a process called quantitative tightening, or QT. (Reporting by Michael S. Derby Editing by Chris Reese )
