Jan 13, 2024

I recently heard about a debate within the Federal Reserve regarding the potential slowing or halting of its balance sheet shrinkage in the coming months. The Fed has already reduced its balance sheet by about $1.3 trillion, leading to discussions about the implications for policy. One of the key considerations is the Fed’s desire to hold fewer bonds, particularly mortgage bonds, in order to influence the pricing of risky assets. There is also a goal to decrease the supply of reserves in the banking system, independent of the asset side of the balance sheet. However, there is uncertainty surrounding the amount of reserves needed to achieve these priorities, adding a level of complexity to the decision-making process.

In other financial news, there has been a recent change to the federal tax credit for electric vehicles, leading to some confusion among consumers. Additionally, an investigation is underway to determine the cause of a door detachment on a Boeing 737 MAX 9 aircraft during an Alaska flight, resulting in disruptions for United and Alaska Airlines fliers. These are some of the key updates in the financial world that I came across recently.

Stay Well!