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Harker: 'Incredibly boring' wind-down of $4.5T balance sheet may begin in 2017

Federal Reserve Bank of Philadelphia Patrick Harker believes the central bank will start to wind down the size of the balance sheet it amassed in the post-crisis era, and that the process would be "slow, steady, incredibly boring, and essentially on autopilot."

"Based on the strength of the economy, I still see three rate hikes of 25 basis points each as appropriate for 2017," he said at the Pennsylvania Economic Association Annual Conference, according to a transcript.

"I also believe that we will begin unwinding the balance sheet sometime this year, although I’m not tying that to a date on the calendar or a data point on an inflation report."

The Fed bulked up its holdings of Treasurys and mortgage-backed securities after the recession, increasing the assets on its balance sheet to about $4.5 trillion. After years of economic growth, it is now considering how to reduce the size of its balance sheet.

The economy is "more or less at full health," said the Philadelphia Fed president, who has a vote on the policy-making Federal Open Market Committee.