Fed's Balance Sheet Reduction Could Impact Markets, Analyst Suggests

Wilson Asset Management's portfolio strategist, Damian Boey, has commented on the potential implications of a Federal Reserve policy shift. According to PANews, Boey noted that Walsh has expressed a preference for lowering interest rates. However, the condition for achieving this is the reduction of the Federal Reserve's balance sheet. The market is contemplating the potential consequences of a shrinking balance sheet. If the Federal Reserve begins to withdraw foundational support, assets traditionally used to hedge against balance sheet expansion, such as gold, cryptocurrencies, and bonds, may face sell-offs.