The Federal Reserve’s Hotel California Moment

The Federal Reserve is having its Hotel California moment.

  • The Fed began quantitative easing in 2008 with a balance sheet of $800 billion, growing to $4.5 trillion.
  • Even with quantitative tightening, the balance sheet will not be reduced back to normal levels below $1 trillion.
  • The Fed has paused on raising rates due to a slower economy in the 4th quarter.
  • While the economy has slowed dramatically from 2018, we still believe GDP will be up this year.

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