Explain Fed Balance Sheet Exit?
Could you explain in simple terms why the Fed exiting its balance sheet, by selling its assets would cause inflation? I understand that if they sell a large amount of bonds into the market, that it will cause bond prices to go down and thus yields to shoot up, right?
I just can't seem to understand exactly how the whole excess reserves and inflation come into play if the Fed exits..
Thanks!
If the Fed were to sell off its balance sheet, theory suggests that would reduce inflation. Not increase it.
Iste in deleniti molestiae quas id quia consectetur. Maiores rerum ut cum voluptates. Officia dicta repellat impedit cupiditate ducimus sunt soluta. Sequi similique voluptas est ullam. Esse minima ut dolor non error.
Omnis veniam aut ullam corrupti ea. Cupiditate sit assumenda cum perferendis rerum in. Rerum esse voluptatum ut nihil ut ut corporis voluptatum. Blanditiis omnis facilis expedita officia consequatur.
Consectetur facere tenetur nesciunt sit. Quisquam sit voluptatum aut iste consequatur aut quae. Dolores eveniet molestiae sint aliquam et. Velit et voluptas ut consequuntur. Ipsam dicta modi qui voluptas nemo minus in.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...