Banks in the US responded with “considerable differences” to the Federal Reserve’s balance sheet reduction programme, research published by the Kansas Fed finds.
Blake March and Rajdeep Sengupta evaluate how banks adjusted their portfolios to the Fed’s balance sheet reduction programme, often referred to as quantitative tightening. They examine the period of 2014–19.
The Fed started reducing reserves in 2017 and ended in July this year. It reduced the level of total reserves in the system from