The Fed balance sheet has grown sharply

Sources: Bloomberg and Wells Fargo Investment Institute. Weekly data from January 4, 2006 to March 31, 2022. Shaded area represents time frame of a U.S. economic recession. Fed = Federal Reserve.

Key Takeaways

  • The Federal Reserve (Fed) balance sheet has increased significantly over the past decade. While the Fed began to decrease its balance sheet in early 2018, the pandemic hit before it normalized.
  • The Fed will soon move to shrink its balance sheet through a passive runoff of maturing securities, now that it has completed its securities purchases under quantitative easing.