By Jonnelle Marte

(Reuters) – The Federal Reserve intends to let bond holdings go off its balance sheet when they mature rather than sell bonds, in order to reduce its huge portfolio. This was announced Wednesday by the central bank.

“The Committee intends to reduce the Federal Reserve’s securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA),” the Fed said in principles released at the end of the central bank’s two-day policy-setting meeting.

Fed officials indicated that they believe they’ll begin to decrease the central bank’s balance sheets after increasing interest rates.

According to the Fed, Treasury securities will be held for a longer time and it will decrease its exposure on other credit types.

Nearly $9 trillion of Fed assets doubled during the pandemic. The central bank bought Treasury bonds and mortgagebacked securities in order to help markets and the economy. The Fed is currently working on a plan to reduce those holdings. However, Fed officials must be cautious as they decrease their holdings.

The Fed stated in a statement that “the Committee is ready to adjust any details of its approach towards reducing the balance sheet size in light of economic or financial developments.”