Better pay off those adjustable rate credit cards before the Federal Reserve takes a chisel to its enormous balance sheet.
"We expect balance sheet adjustment to start in September and the Fed hiking cycle to resume in December," Goldman Sachs chief economist Jan Hatzius wrote in a note Saturday ahead of next week's Federal Reserve meeting. "With respect to the balance sheet, we assume initial caps on the amounts of securities that can run off in any given month of $10 billion for U.S. treasuries and $5 billion for mortgage-backed securities, that rise over four quarters to caps of $40 billion and $20 billion, respectively."
As TheStreet has reported, the Federal Reserve may begin later this year to shrink a balance sheet that has swelled to $4.5 trillion after the financial crisis. To pull this off, the Janet Yellen led Fed would likely use a system of gradually increasing caps to salve concerns about how much liquidity would be pulled from markets each month.
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