The Federal Reserve began the process Wednesday of shrinking its $8.9 trillion asset portfolio. Here are answers to five of the most commonly asked questions from our readers about how it works.
No. The Fed dramatically expanded its portfolio in March 2020 to stabilize dysfunctional markets, and then it continued to purchase Treasury and mortgage-backed securities in large quantities after that to provide additional stimulus to the economy by holding down longer-term yields. It ended those purchases in March 2022 and has been keeping its holdings steady since then by reinvesting the proceeds of maturing securities into new ones.
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