Derby’s Take: A Sense of the Policy Impact of Cuts to the Fed’s Balance Sheet Emerges

The Federal Reserve appears to be moving toward a more precise understanding of just how potent the bond buying part of its monetary policy regime is.

And based on a new Fed paper and comments by some officials, the effect of the purchases is pretty modest relative to what the central bank can accomplish by changing its federal-funds interest rate target.

This post first appeared on wsj.com