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Comment by barelysapient | Hacker News Reader

I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of rising interest rates on inflation?

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Given your other comment, when you say "ongoing," what you mean is some of the assets they purchased remain on the Fed's books. If they don't continue buying, the fact that they still hold some of it doesn't have any further impact on rates on debt being offered in the future. They're doing more selling than buying at this point, which drives rates up. You don't need to dump everything at once to change the direction of movement. Think of like the strategic oil reserves. Selling any of it drives prices down. You don't need to sell literally all of it.

QE was ended in March, and we're in full QT now.

Ended; but there's still about $8T on the books of past QE right?

https://www.businessinsider.com/personal-finance/quantitativ...

> there's still about $8T on the books of past QE right?

Yes, about $8.8tn [1]. The Fed is running them off at about $60n a month [2]. (The Fed's optimal balance sheet is estimated to be around $4tn [3].)

The elephant in the room is the Fed's mortgages [4][5]. Those will have to start being sold soon, since rising rates mean mortgagers aren't refinancing and thus a run-off strategy doesn't reduce holdings.

[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

[2] https://www.federalreserve.gov/newsevents/pressreleases/mone...

[3] https://advisors.vanguard.com/insights/article/thefedsplanto...

[4] https://www.ft.com/content/1a2e829e-de82-4083-abcb-ceeb46a45...

[5] https://fred.stlouisfed.org/series/WSHOMCB

The sparks will really fly when they begin to require FNMA and FHLMC conforming loans be assumable.

I guess you meant QT and not QE.

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