Fed Chair Jerome Powell, speaking at the Senate hearing for his renomination, said on Tuesday that the Fed is trying to get to a place where interest rates are more neutral for the economy and then to a place where they are "tight". 

Additional Remarks:

"We haven't made any decisions regarding balance sheet reduction."

"We will talk again about it at the January meeting."

"Economy is in a completely different place to last tightening cycle."

"Reducing balance sheet this time will be 'sooner and faster'."

"We will reduce the balance sheet sooner and faster than last time."

"Balance sheet is far above where it needs to be."

"We will take two to four meetings to work through the balance sheet decision."

"We tend to take 2, 3, 4 meetings to make such decisions."

Market Reaction

Perhaps motivated by a lack of fresh surprises from Fed Chair Powell in his remarks over the course of the last hour, the US dollar has been weakening in recent trade, whilst risk assets such as the Nasdaq 100 that had recently been hit by fears over Fed hawkishness are gaining. The Nasdaq 100 index is now up 0.8% on the session, erasing early session losses.