Powell Sees 'Much Smaller' Fed Balance Sheet Over Time

The video discusses the anticipated changes in the balance sheet size post-crisis, highlighting that it will be smaller than its current size but larger than before the crisis. It will mainly consist of treasury securities and will be optimized for monetary policy. The balance sheet will shrink over three to four years by allowing securities to mature and roll off passively. The final size will depend on public demand for liabilities like cash and reserves, though exact demand is uncertain. Projections suggest a balance sheet size of 2.5 to 3 trillion, but this is not certain.

What type of securities will primarily make up the balance sheet?

What is the uncertainty mentioned regarding the balance sheet?