Federal Reserve Unwinding: Not Until Next Spring?

The Fed might not start pulling back into well into 2010.

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Of all the commentary and speculation from economists in reaction to the recent Fed statement, I found this one the most interesting:

First, the Fed continues to extract itself from the array of special programs adding to the balance sheet more or less as expected. This doesn’t mean that tightening is around the corner, but policymakers are inching away from the extraordinary measures put in place in 2007 and 2008. Second, the Fed is taking their sweet time to do so. If in fact the Fed buys agencies and MBS until the end of [the first quarter] next year, then the Fed’s balance sheet is unlikely to peak until then, and various exit strategies (reverse RPs, etc.) may not even begin until next spring. –Stephen Stanley, RBS

[Emphasis added]