The Fed is not expected to achieve its 2 per cent inflation target until 2026, Mr. Schmid said. The final phase of a 2 per cent decline in inflation is likely to be the most challenging for monetary policy. The Fed's quantitative tightening is partly at odds with interest rate cuts. The Fed's balance sheet stance is still holding yields down. It will now oppose a halt to the Fed's balance sheet reduction. It is not desirable that moves to shrink the balance sheet cause volatility.