Fed Gov. Brainard sees 'downside risks' increasing, says balance sheet runoff should end this year

Federal Reserve Governor Leal Brainard said on Thursday that she is growing more concerned about economic growth, particularly the impact that the global slowdown will have on the United States. The same morning, she said she will be watching the developments in the retail industry because the sales came up well short of market expectations. Overall, the downside risks have definitely increased relative to the outlook for continued growth. The Fed said in January that it would be patient in continuing interest rate hikes. Brainard says she is comfortable waiting and learning as more data comes in about the economy. She did indicate that the Fed should be nearing the end of the program to reduce bond holdings on its balance sheet which once stood at 4.5 trillion and is now around 4 trillion. In her own view she believes that the balance sheet normalization process should come to and end later this year.

I have a few questions about the Fed and their intended policies. The Fed pre-great recession had a less than 1 trillion on their balance sheet (Federalreserve.gov). If it has taken 10 years to roll off 500 billion then I hardly expect they can roll off at an increased rate by the end of the year. I may not understand exactly how the roll off works but removing 3 trillion in bad bonds by the end of the year sounds impossible, so it will be interesting to see how the market responds. At the same time, the Fed is being cautious about hiking rates. I believe that accelerated rate hikes and accelerated roll offs would spook investors about how solid our domestic market is but may be necessary to prevent future failures. I don't believe that the Fed can sustain a massive bailout as of right now and if a huge recession all of the sudden came into our lives the Fed wouldn't be able to help really. I doubt there will be a great collapse like in 2008 where we will need this, I just think that a continuous push for economic growth may over extend the Untied States and the Fed wont be there to bail the economy out again. 

https://www.cnbc.com/2019/02/14/fed-gov-brainard-downside-risks-have-definitely-increased-on-the-economy.html