The Timeline of The Fed's Exit Strategies

From the June FOMC meeting minutes,

Step 1: cease reinvesting some or all payments of principal on the securities holdings in Special Open Market Account (SOMA).

Step 2: modify its forward guidance on the path of the federal funds rate and will initiate temporary
reserve-draining operations aimed at supporting the implementation of increases in the federal funds rate.

Step 3: begin raising its target for the federal funds rate, and from that point on, changing the level or range of the federal funds rate target will be the primary means of adjusting the stance of monetary policy.

Step 4: Sales of agency securities from the SOMA will likely commence sometime after the first increase in the target for the federal funds rate.


Step 5: The pace of sales is expected to be aimed at eliminating the SOMA’s holdings of agency securities over a period of three to five years, thereby minimizing the extent to which the SOMA portfolio might affect the allocation of credit across sectors of the economy.

Step 6: The Committee is prepared to make adjustments to its exit strategy if necessary in light of economic and financial developments