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Reducing the Fed portfolio to stop this year, Powell says



WASHINGTON (Reuters) – The Federal Reserve will reduce its $ 4 trillion balance a year later, President Fed Jerome Powell said Wednesday, when the end of a process, investors continue to increase Fed's interest rate.

"We have achieved, I think, the hope that we will soon plan the scope, in the end of the standardization of the balance, will be explained in all ways," said Powell's House Financial Services Committee members. What was the most accurate detail on the subject?

"We will remain in position … this year to stop the storm," he said, leaving that balance at 16 percent or 17% of GDP by 20%, about 6% before the financial crisis about a decade ago.

The GDP is currently around US $ 20 trillion, the Fed Balance suggests between $ 3.2 trillion and $ 3.4 trillion.

Fed has cut its balance, according to the dollar purchased at the dollar in the years following the crisis, to keep interest rates lower and to strengthen the economy – from October 2017 onwards, more than $ 50 million. A few months ago a few months ago, it reduced the portfolio of a couple of years ago.

But in the meetings that began in November, Fed has launched a new approach. Banks with central banks and banks in central banks all over the world believe that a large balance is needed to ensure that the short-term interest rates are controlled. economy

In addition, Fed politicians believe balance sheet policies have to take economic and economic conditions into account.

There are questions about the plan, if Fed adjusts the maturity of the Treasury portfolio and eliminates the values ​​associated with mortgage protection accumulated over the days of the purchase of assets.

Powell says Fed has made decisions before.

"Sales MBS are really approaching the back of the line, we must think about the maturity composition, things like that and that's why we will work very carefully," said Powell. "Markets are sensitive."

Powell's remarks on the balance ended with more than two-hour testimony before the Democrat-led commission from the New York Democrats to Alexandria Ocasio-Cortez's newly elected members.

But the New Deal Green advocate and the populist Bronx questioned the debates and Powell said Wednesday the comments made to the Senate Bank of the Republic controlled by the Republicans, the economy is on the ground and the Fed patient's fees increase.

When Powell was in the Senate, the Fed's plan asked about his recovery plan for this year's policy. The Parliament assured Fed that it was trying to improve its approach to meet the current 2 percent inflation target.

Jerome Powell, chairman of the Federal Reserve Board of the United States, listens to the Senate Bank and the Housing and Urban Affairs Commission in the hearing of "Congressional Money Shop Economics Report" in Washington, United States of America, on February 26, 2016. Capitol Hill. REUTERS / Jim Young

"We are not getting more inflation, the whole stop," he said.

Powell also repeated his remarks that the failure of the Congress to raise its portfolio would be "fatal effects" to be forced to pay a United States debt.

Powell law twice a year before the Congress, the members of the House Financial Services Committee and the Senate Bank Commission on the state of monetary policy and economics.

Howard Schneider and Jason Lange's Reports, written by Ann Saphir; Edited by Andrea Ricci

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