The Federal Reserve has about a year left to reduce its vast holdings of cash and securities, according to a survey of large banks released Thursday by the New York Fed. The bank’s Survey of Primary Dealers found that respondents predicted balance sheet reduction would end in the third quarter of next year.
The balance sheet reduction will stop when the Fed’s current holdings of approximately $8 trillion in assets fall to $6.75 trillion. Primary dealers are the counterparties to the Fed’s market intervention operations and are responsible for underwriting U.S. Treasury auctions. The survey of traders was conducted ahead of the FOMC meeting on September 19-20.
