Federal Reserve Chair Janet Yellen. Photo: Reuters/Yuri Gripas

Minutes of the last US Federal Reserve meeting have laid out some details on how stimulus measures undertaken after the 2008 financial crisis might be eased, reports the Financial Times

As Walter Schmidt of FTN Financial notes, the Fed is only taking “baby steps” for the time being.

“Think of the Fed as a trainer and the market as a very out-of-shape athlete preparing to run a marathon,” Schmidt was quoted by the FT as saying. “If you’re the trainer, there is no way you’re going to start the prospective athlete with a five-mile run on their first training session.”

Details as gleaned by the FT:

  • The Fed’s current balance sheet totals around US$4.5 trillion, accounting for Treasuries and mortgage-backed securities purchased during the crisis
  • Reduction in these assets will likely be done through phasing out reinvestments, as opposed to outright sale of securities
  • The Federal Open Market Committee would announce increasing caps on amounts of securities that would be permitted to run off
  • Reinvestments would decline with increases in caps, with limits raised every three months until the balance sheet is “normalized”
  • The start of such easing process would depend on the shape of the economy, but the minutes released this week indicate most policymakers support beginning the process this year