In shedding bonds, Fed aims for boring end to crisis-era measures

The U.S. Federal Reserve is set on Wednesday to announce the start of a plan to trim its $4.5-trillion (3.31 trillion pounds) portfolio of assets, much of it amassed in response to the 2007-2009 financial collapse, marking another milestone in bringing to an end the crisis-era measures.

If Fed Chair Janet Yellen gets her way, financial markets that had swung wildly with past shifts to the policy will barely shrug when the asset reduction begins, probably in October. 

The plan is for the Fed to stop buying bonds so gradually that it will take years for its holdings to shrink to $3 trillion, around where some policymakers and economists estimate it will settle. 

The Fed’s asset holdings stood at about $900 billion in mid-2008, before it began buying bonds to spur hiring and economic growth. 

Years of planning and months of careful public messaging should make the asset-unwinding process about as riveting as “watching paint dry,” according to Reserve Bank of Philadelphia President Patrick Harker. 

The U.S. central bank is expected to leave interest rates unchanged at its Sept. 19-20 policy meeting, according to a Reuters poll of nearly 100 economists, with markets pricing in a 52 percent chance of a rate hike coming at a December meeting. 

The Fed will also release a fresh round of projections on Wednesday, laying out policymakers’ own expectations for rate hikes ahead.