February 7, 2014 / 12:00 AM / 4 years ago

Fed balance sheet would shrink quickly without sales -Rosengren

Feb 6 (Reuters) - Simply letting purchased bonds mature in the years ahead would shrink the Federal Reserve’s swollen balance sheet fairly quickly without the need to actively sell them, a top U.S. central banker said on Thursday.

“Our intention is to get back to a more normal size balance sheet,” Boston Fed President Eric Rosengren said at a Florida conference, acknowledging the risk that interest rates are likely to rise in the future, leading to possible losses on the balance sheet that is now worth $4 trillion and growing.

“If we stopped purchasing mortgage backed securities, that part of the balance sheet comes down actually relatively quickly,” he said.

As for the purchases of longer-term Treasury bonds, Rosengren said that side of the balance sheet also declines “surprisingly quickly by just not doing any purchases and not reinvesting.”

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