Fed's Rosengren: Fed could start shrinking balance sheet 'relatively soon'

Rosengren speaks at an Economics Institute

• Backs shrinking balance sheet 'earlier' and very gradually
• Favours running off bonds relatively soon with little effect on rate hikes
• Should first shed only a small percentage of expiring bonds
• US at full employment, inflation around 2% goal
• It's 'quite likely' asset purchases will be needed in future downturns

So the Fed isn't even considering letting expiring bonds fall out of the balance sheet. They will reinvest most of the proceeds and only let a 'small percentage' run off.

That's basically a token move.

The way he's talking the balance sheet reduction would be akin to raising rates by 1 basis point just to say "we hiked rates".