I’ve been interested in how the Fed would exit its Quantitative Easing strategy for a few years, and it apears the Fed does not want to shock the system by dumping T Bills and mortgage backed bonds too quickly on the market.
But I was confused by the passage that reads, “The risk exists that investors could become spooked by the rising number of bonds being transferred back into private hands.”
In an article on the same topic posted by NPR, it said the Fed would not sell off these holdings, but merely allow them to mature and then not reinvest them, which they have been doing in recent years.
Does anyone have any insight into this?