EFTA Document EFTA01459047

This is especially true if the Fed decides to taper its reinvestment policy and this leads to a tightening of financial conditions • The Fed is currently reinvesting proceeds from its maturing securities keeping its balance sheet stable • Altering this reinvestment policy would equate to a monetary policy tightening - Fed can stop, or more likely taper reinvestments - Opposite effect to QE, i.e., higher long-term rates • As such, the decision and the tightening of financial conditions