Fed to Reduce Balance Sheet by $95B/Month, Powell Signals Policy Peak

Federal Reserve Chair Jerome Powell highlighted the ongoing challenges with inflation, stating it remains too high with uncertain progress towards reduction. In recent statements, Powell emphasized the Federal Reserve's decision to maintain the current policy interest rate while continuing to reduce its securities holdings. Additionally, Powell mentioned the Fed's plan to decrease its balance sheet by up to $95 billion per month, starting "fairly soon". He also suggested that the policy rate might have reached its peak in this tightening cycle, indicating a potential easing of policy restraint later this year if the economy evolves as expected. Fed officials remain hopeful for an inflation slowdown, despite rising caution, with the Fed's preferred inflation gauge expected to stay relatively elevated.