Fed will begin shrinking its $4.5 trillion balance sheet ‘relatively soon’

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Federal Reserve officials announced Wednesday that they would hold off on raising their interest rate target this month, leaving it at 1-1.25 percent, but also indicated that they will soon start shrinking the massive portfolio of bonds the central bank built up in fighting the recession.

Wednesday’s decision not to raise rates was expected. Markets anticipate that the central bank might raise interest rates again by the end of the year, which would mean three rate increases this year.

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