By Dan Burns

(Reuters). Federal Reserve Chair Jerome Powell stated Wednesday that policymakers decided swiftly to stop asset purchases which had been padding its easy money policy through the pandemic. However, no decisions have yet been made on shrinking central bank’s balance sheets.

Powell stated that this issue would be one of the many topics the Fed will address in future meetings. Powell spoke at a press conference following the Fed’s recent policy meeting, at which the central bank decided to increase the rate at which its bond purchases “tapering” process by double.

By mid-March the Fed will stop increasing its almost $8.2 trillion stock of Treasuries & mortgage-backed Securities. This is about three months before it was under the original tapering pace.

Powell stated that officials have yet to decide what to do with the assets beyond March. The stockpile, even at its current level, will provide shelter, Powell stated.

Powell stated that although they have not made decisions about the start of run-off, “those decisions are precisely what we will be looking at in future meetings.”

In March 2020, after the widespread coronavirus pandemic caused lockdowns in the country that crippled the economy and sent the U.S. Treasury markets into meltdown, the Fed began bond buying. After markets stabilized and the economy had stabilized, the Fed opened the program by purchasing $2 trillion in bonds in a matter of months. Then it throttled down to $120 billion per month in the summer 2020.

Meeting attendees in November decided that they would begin to decrease the purchase of these items due to rising inflation. This is despite the fact that inflation is more than double their target annual rate at 2%. Also, there are signs that the labor market is moving towards its maximum-employment goal. Since then, inflation has increased and the job market continues to improve – leading officials to speed up their winding down on Wednesday.

Only the Fed has ever completed a tapering program. This tapering exercise will be completed in half the time of its predecessor in 2014. It was the fourth in a series of bond-buying exercises that the Fed conducted to assist the economy in recovering from the 2008-2009 financial crisis.

The Fed kept its balance sheet basically in an unaltered state after the taper of 2014. It reinvested the proceeds from mature bonds for three years. The Fed began shrinking its balance sheet in 2018, allowing certain bonds to be rolled off without having to reinvest the principal at the end. This was known as “quantitative loosening,” or “QT.”

In September 2019, the abrupt end of the QT program was caused by turmoil in the money market fund and a crucial funding market for banks. Officials are not keen to repeat that.

Powell stated that while people looked at the last cycle, they thought it was informative and interesting. However, Powell noted that people have noticed that the current situation is different and that these differences will inform any decisions about the balance sheet.