Accessible Version

Substitutability between Balance Sheet Reductions and Policy Rate Hikes: Some Illustrations and a Discussion, Accessible Data

Figure 1: Illustration of the substitutability between policy rate and balance sheet actions

Top-Left Figure
Total assets
Trillions of dollars

Date Baseline No runoff Full runoff
Jan-19 4.04 4.04 4.04
Feb-19 3.97 3.97 3.97
Mar-19 3.96 3.96 3.96
Apr-19 3.89 3.89 3.89
May-19 3.85 3.85 3.85
Jun-19 3.83 3.83 3.83
Jul-19 3.78 3.78 3.78
Aug-19 3.76 3.76 3.76
Sep-19 3.86 3.86 3.86
Oct-19 4.02 4.02 4.02
Nov-19 4.05 4.05 4.05
Dec-19 4.17 4.17 4.17
Jan-20 4.15 4.15 4.15
Feb-20 4.16 4.16 4.16
Mar-20 5.25 5.25 5.25
Apr-20 6.66 6.66 6.66
May-20 7.10 7.10 7.10
Jun-20 7.08 7.08 7.08
Jul-20 6.95 6.95 6.95
Aug-20 6.99 6.99 6.99
Sep-20 7.06 7.06 7.06
Oct-20 7.15 7.15 7.15
Nov-20 7.22 7.22 7.22
Dec-20 7.36 7.36 7.36
Jan-21 7.40 7.40 7.40
Feb-21 7.59 7.59 7.59
Mar-21 7.69 7.69 7.69
Apr-21 7.78 7.78 7.78
May-21 7.90 7.90 7.90
Jun-21 8.08 8.08 8.08
Jul-21 8.22 8.22 8.22
Aug-21 8.33 8.33 8.33
Sep-21 8.45 8.45 8.45
Oct-21 8.56 8.56 8.56
Nov-21 8.68 8.68 8.68
Dec-21 8.76 8.76 8.76
Jan-22 8.86 8.86 8.86
Feb-22 8.93 8.93 8.93
Mar-22 8.94 8.94 8.94
Apr-22 8.88 8.90 8.90
May-22 8.88 8.90 8.90
Jun-22 8.84 8.90 8.72
Jul-22 8.80 8.90 8.56
Aug-22 8.75 8.89 8.34
Sep-22 8.67 8.89 8.23
Oct-22 8.59 8.89 8.11
Nov-22 8.51 8.89 7.94
Dec-22 8.42 8.89 7.84
Jan-23 8.34 8.89 7.75
Feb-23 8.25 8.89 7.58
Mar-23 8.17 8.89 7.49
Apr-23 8.09 8.89 7.37
May-23 8.00 8.89 7.22
Jun-23 7.92 8.89 7.14
Jul-23 7.83 8.88 7.06
Aug-23 7.74 8.88 6.91
Sep-23 7.65 8.88 6.84
Oct-23 7.57 8.88 6.77
Nov-23 7.49 8.88 6.68
Dec-23 7.40 8.88 6.61
Jan-24 7.32 8.88 6.53
Feb-24 7.24 8.88 6.43
Mar-24 7.16 8.88 6.36
Apr-24 7.08 8.88 6.27
May-24 7.00 8.88 6.15
Jun-24 6.91 8.88 6.10
Jul-24 6.83 8.88 6.03
Aug-24 6.74 8.88 5.94
Sep-24 6.66 8.88 5.90
Oct-24 6.58 8.88 5.84
Nov-24 6.55 8.88 5.86
Dec-24 6.52 8.88 5.91
Jan-25 6.49 8.88 5.93
Feb-25 6.46 8.88 5.95
Mar-25 6.43 8.88 5.97
Apr-25 6.40 8.88 5.99
May-25 6.36 8.88 6.01
Jun-25 6.33 8.88 6.03
Jul-25 6.30 8.88 6.05
Aug-25 6.30 8.88 6.07
Sep-25 6.30 8.88 6.09
Oct-25 6.29 8.88 6.10
Nov-25 6.29 8.88 6.12
Dec-25 6.29 8.88 6.14
Jan-26 6.29 8.88 6.16
Feb-26 6.29 8.88 6.19
Mar-26 6.29 8.88 6.21
Apr-26 6.29 8.88 6.23
May-26 6.29 8.88 6.25
Jun-26 6.29 8.88 6.27
Jul-26 6.28 8.88 6.28
Aug-26 6.30 8.88 6.30
Sep-26 6.34 8.88 6.32
Oct-26 6.36 8.88 6.34
Nov-26 6.38 8.88 6.36
Dec-26 6.40 8.88 6.38
Jan-27 6.42 8.88 6.40
Feb-27 6.44 8.88 6.43
Mar-27 6.47 8.88 6.45
Apr-27 6.49 8.88 6.47
May-27 6.51 8.88 6.49
Jun-27 6.53 8.88 6.51
Jul-27 6.55 8.88 6.53
Aug-27 6.57 8.88 6.55
Sep-27 6.59 8.88 6.57
Oct-27 6.61 8.88 6.59
Nov-27 6.63 8.88 6.61
Dec-27 6.64 8.88 6.63

Top-Right Figure
Total assets as percent of GDP
Percent

Date Baseline No runoff Full runoff
2019 Q1 19.00 19.00 19.00
2019 Q2 18.11 18.11 18.11
2019 Q3 17.67 17.67 17.67
2019 Q4 18.82 18.82 18.82
2020 Q1 21.05 21.05 21.05
2020 Q2 35.66 35.66 35.66
2020 Q3 33.11 33.11 33.11
2020 Q4 33.72 33.72 33.72
2021 Q1 34.31 34.31 34.31
2021 Q2 34.83 34.83 34.83
2021 Q3 35.92 35.92 35.92
2021 Q4 36.10 36.10 36.10
2022 Q1 36.26 36.26 36.26
2022 Q2 35.35 35.48 35.24
2022 Q3 34.25 34.85 32.81
2022 Q4 32.81 34.30 30.71
2023 Q1 31.42 33.84 28.95
2023 Q2 30.11 33.46 27.26
2023 Q3 28.83 33.11 25.84
2023 Q4 27.61 32.79 24.65
2024 Q1 26.45 32.47 23.53
2024 Q2 25.31 32.15 22.35
2024 Q3 24.18 31.84 21.35
2024 Q4 23.27 31.55 20.86
2025 Q1 22.69 31.20 20.91
2025 Q2 22.14 30.91 20.92
2025 Q3 21.71 30.63 20.92
2025 Q4 21.50 30.35 20.92
2026 Q1 21.26 30.02 20.91
2026 Q2 21.05 29.74 20.91
2026 Q3 20.92 29.47 20.91
2026 Q4 20.96 29.20 20.91
2027 Q1 20.95 28.89 20.90
2027 Q2 20.96 28.62 20.91
2027 Q3 20.96 28.36 20.91
2027 Q4 20.96 28.11 20.91

Bottom-Left Figure
10-year term premium effect
Basis points

Date Baseline No runoff Full runoff
2022 Q2 -213.27 -263.13 -201.71
2022 Q3 -208.59 -260.67 -196.82
2022 Q4 -204.13 -258.22 -192.46
2023 Q1 -199.99 -255.77 -188.58
2023 Q2 -196.12 -253.28 -185.10
2023 Q3 -192.52 -250.76 -182.01
2023 Q4 -189.19 -248.19 -179.28
2024 Q1 -186.17 -245.67 -176.86
2024 Q2 -183.44 -243.17 -174.75
2024 Q3 -180.96 -240.64 -172.92
2024 Q4 -178.76 -238.13 -171.37
2025 Q1 -176.74 -235.66 -169.91
2025 Q2 -174.82 -233.18 -168.45
2025 Q3 -173.05 -230.71 -167.03
2025 Q4 -171.36 -228.25 -165.71
2026 Q1 -169.78 -225.83 -164.51
2026 Q2 -168.26 -223.42 -163.38
2026 Q3 -166.81 -221.01 -162.34
2026 Q4 -165.43 -218.60 -161.38
2027 Q1 -164.14 -216.22 -160.50
2027 Q2 -162.90 -213.82 -159.65
2027 Q3 -161.75 -211.45 -158.90
2027 Q4 -160.68 -209.08 -158.20

Bottom-Right Figure
Federal funds rate
Percent

Date Baseline No runoff Full runoff
2019 Q1 2.40 2.40 2.40
2019 Q2 2.40 2.40 2.40
2019 Q3 2.20 2.20 2.20
2019 Q4 1.65 1.65 1.65
2020 Q1 1.23 1.23 1.23
2020 Q2 0.06 0.06 0.06
2020 Q3 0.09 0.09 0.09
2020 Q4 0.09 0.09 0.09
2021 Q1 0.08 0.08 0.08
2021 Q2 0.07 0.07 0.07
2021 Q3 0.09 0.09 0.09
2021 Q4 0.08 0.08 0.08
2022 Q1 0.37 0.37 0.37
2022 Q2 0.88 1.44 0.79
2022 Q3 1.38 1.94 1.29
2022 Q4 1.63 2.18 1.54
2023 Q1 1.88 2.43 1.79
2023 Q2 2.13 2.68 2.04
2023 Q3 2.25 2.81 2.16
2023 Q4 2.38 2.93 2.29
2024 Q1 2.38 2.94 2.29
2024 Q2 2.63 3.19 2.54
2024 Q3 2.63 3.19 2.54
2024 Q4 2.63 3.19 2.54
2025 Q1 2.56 3.12 2.47
2025 Q2 2.50 3.06 2.41
2025 Q3 2.44 3.00 2.35
2025 Q4 2.38 2.94 2.29
2026 Q1 2.38 2.94 2.29
2026 Q2 2.38 2.94 2.29
2026 Q3 2.38 2.94 2.29
2026 Q4 2.38 2.94 2.29
2027 Q1 2.38 2.94 2.29
2027 Q2 2.38 2.94 2.29
2027 Q3 2.38 2.94 2.29
2027 Q4 2.38 2.94 2.29

Sources: Staff simulations of the FRB/US model augmented to incorporate term premium effects arising from the Federal Reserve’s asset holdings; Federal Reserve Bank of New York, Survey of Primary Dealers and Survey of Market Participants.

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Last Update: June 03, 2022