Morgan Stanley: The Fed is now expected to slow down the pace of balance sheet reduction starting in June

Morgan Stanley economists said the Fed will announce a plan to slow down its balance sheet reduction in May and start it in June. The bank's Seth Carpenter and others wrote that the Fed is expected to discuss the issue of balance sheet reduction in "details" at the next three FOMC meetings, announce in May the scale and extent of the balance sheet reduction action, and start this process in June. process. Morgan Stanley had previously predicted that the Fed would begin to slow down the pace of balance sheet reduction from September last year. The bank now maintains its expectation that the balance sheet reduction will end in February 2025; it expects the use of the Fed's overnight reverse repurchase facility to fall to $250 billion by May or June. (Golden Ten)