Morgan Stanley: Expects the Federal Reserve's balance sheet to shrink by $1.5 trillion.

Morgan Stanley economists Seth Carpenter and Michael Gapen stated in their report that the bank's baseline prediction is that the Federal Reserve will reduce the size of its balance sheet by about $1.5 trillion over the next two years, potentially starting as early as the first quarter of 2027; the reasonable reduction range is between $600 billion and $2.5 trillion.