Yellen: Fed may cut assets over a decade

The US Federal Reserve is in no rush to decide the appropriate size of its balance sheet, but if it ultimately shrinks it to a pre-crisis size, the process could take the better part of a decade, Fed chair Janet Yellen said yesterday.

Ms Yellen, in testimony to a Senate panel, said no decision had yet been made on the central bank’s portfolio of assets, which has swollen to $4.5 trillion (€3.25trn) from about $800bn in 2007.

Three rounds of asset purchases meant to stimulate the economy in the wake of the 2007-2009 financial crisis have boosted the balance sheet to this record level. Unsatisfied with the US recovery, the Fed is still adding $45bn in bonds each month, though the purchases should end later this year.