The Federal Reserve could begin to sell off assets later this year and should try to get its balance sheet down to a normal size before the next recession strikes, a senior Federal Reserve official said on Monday.
"Maybe you get in the second half of 2010 or something like that, if things are going pretty well, maybe then you'd sell a little bit at that point and you'd try to see how the market reacts," St. Louis Federal Reserve Bank President James Bullard told Reuters in an interview.
The Fed will come to the end of its purchase of $1.25 trillion worth of mortgage-backed securities at the end of March.
As the U.S. economy's recovery gains traction, the Fed may need to reduce the assets it holds on its balance sheet to prevent inflation from taking off.
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