Despite many encouraging signs in the economy, Yellen is opting to go slowly to reduce the central bank’s $4.5 trillion holdings. [Yellen rejects Trump approach to Wall Street regulation, says post-crisis banking rules make economy safer]Reducing the massive balance sheet was not without risks. There was no guidebook for the Fed's balance sheet to grow so large, and there's no guidebook now on how to shrink it back down. “If I had to bet, I would bet things would go smoothly, but I wouldn't bet the farm on it,” Joseph Gagnon said of the balance sheet reduction. “It's past time to reduce the Fed's balance sheet, because its role in the economy is unnecessarily large,” said Tate Lacey, an economist at the Cato Institute, a libertarian think tank that has criticized the Fed for bulking up its balance sheet so much.

Source: Washington Post September 20, 2017 18:06 UTC