Stanley Fischer on the Balance Sheet: There will be no Tantrum on Wall Street

Jon Alternative Media, Economy, Fiscal Policies

Regarding the Fed’s balance sheet shrinkage narrative, one of the concerns is an unfavorable market response. The bond market (to the extent an actual market even exists) in 2013 panicked when the Fed began to taper it’s asset purchases. While many are concerned the markets could panic, Fed Vice Chair Stanley Fischer on Monday denied this as a true concern. After all, they’ve been talking about this for some time – even in the FOMC minutes – and the bond market has hardly shrugged.
Said Fischer:
My tentative conclusion from market responses to the limited amount of discussion of the process of reducing the size of our balance sheet that has taken place so far is that we appear less likely to face major market disturbances now than we did in the case of the taper tantrum.

This post was published at Ludwig von Mises Institute on April 18, 2017.