Fed Will Reduce Balance Sheet Rapidly, Brainard Says

The committee plans to tighten monetary policy through interest rate hikes and rapid balance sheet reduction, given the stronger recovery compared to previous cycles. This approach aims to bring policy to a neutral stance, with market expectations already reflecting significant tightening. The impact is evident in longer maturity market conditions, affecting household and business decisions, as seen in rising mortgage rates.

What actions is the committee planning to take regarding monetary policy?

How does the current recovery compare to the previous cycle according to the text?

What is expected to happen to the balance sheet in the near future?

What factors are influencing the market expectations for policy rate increases?

What evidence is provided regarding the tightening of market financing conditions?