Interest Rates
Categories
Monetary Policy
In with a bang, out with a whimper
Fed balance sheet runoff will take a long time
.png)
In September, the Federal Reserve announced that it would begin reducing the size of its balance sheet by letting some of its bonds mature without fully reinvesting the principal. This widely expected move marked another monumental step in normalizing U.S. monetary policy. There are likely to be several impacts from the Fed’s decision over the short and longer term. However, it is important to note that the Fed’s planned balance sheet “runoff” will take a long time. About half of Fed assets are in securities that will take more than a decade to mature. Given this slow pace of “run off,” barring any macroeconomic shocks, the balance sheet’s size is unlikely to fall to pre-recession levels. While the impact on rates may be modest, a well-managed bond fund should be able to help investors navigate a new era of monetary policy.
Learn more about
Our latest insights
-
-
-
Municipal Bonds
-
Artificial Intelligence
-
Technology & Innovation
This is the headline for the Newsletter promo. Customize the message.
RELATED INSIGHTS
Never miss an insight
The Capital Ideas newsletter delivers weekly investment insights straight to your inbox.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses.
This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only. Use of this website and materials is also subject to approval by your home office.
American Funds Distributors, Inc.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.