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Reproduced from BofA Global Research; Note: Banks included are US Federal Reserve, European Central Bank, Bank of Japan, Bank of England, Bank of China and Reserve Bank of Australia; Chart: Axios Visuals

By the end of this year, analysts at Bank of America Global Research estimate the Fed's balance sheet will have risen to nearly $10 trillion and the world's six largest central banks will have taken their holdings from around $15 trillion to $25 trillion worth of assets.

The big picture: The Fed now has the largest balance sheet of all central banks, having surpassed the European Central Bank and Bank of Japan.

  • The U.S. central bank's holdings are now equal to 34% of U.S. GDP and are expected to reach 48% by year-end, according to BofA's data.

State of play: To put the size of Fed asset purchases this year into perspective, BofA analysts note that "a few weeks ago it was buying the same quantity per day as it was per month during the [global financial crisis]."

What they're saying: This is "monetary policymaking on steroids," Michael Arone, chief investment strategist for State Street Global Advisors, says in a note to clients.

  • "This evolving, new approach to monetary policy during a crisis may never be walked back."

Why it matters: We could already be seeing the Fed's impact.

  • The stock market, bond market and rising home values may be evidence of distortions and asset price bubbles rather than a reflection of confidence or an expected rebound for the economy.

The bottom line: "The disconnect between an investment’s underlying fundamentals and its price make investors uneasy," Arone says.

  • "As a result of the Fed’s new programs, this tension is now most evident in the credit markets. Sadly, investors may have no choice but to dive in."

Go deeper: The Fed's coronavirus response could have unintended results

Go deeper

Fed chair: No interest rate hike coming any time soon

Fed chair Jerome Powell ahead of a congressional hearing in December. (Photo via Getty Images)

Interest rates will stay near zero for the foreseeable future, Federal Reserve chairman Jerome Powell said on Thursday.

Why it matters: It staves off concerns that the central bank is eyeing pulling back on its easy money policy if the economy recovers faster than anticipated.

Dan Primack, author of Pro Rata
Jan 15, 2021 - Economy & Business

Trump blocks banks from limiting loans to gun and oil companies

Illustration: Sarah Grillo/Axios

Big banks are no longer allowed to reject business loan applicants because of the industry in which they operate, according to a new rule finalized on Thursday by the Trump administration.

Why it matters: Wall Street has curtailed its exposure to industries like guns, oil and private prisons, driven by both public and shareholder pressures. This new rule could reverse that trend.

In photos: D.C. and U.S. states on alert for pre-inauguration violence

National Guard troops stand behind security fencing with the dome of the U.S. Capitol Building behind them, on Jan. 16. Photo: Kent Nishimura / Los Angeles Times via Getty Images

Security has been stepped up in Washington, D.C., and state capitols across the U.S. as authorities brace for potential violence this weekend.

Driving the news: Following the Jan. 6 insurrection at the U.S. Capitol by some supporters of President Trump, the FBI has said there could be armed protests in D.C. and in all 50 state capitols in the run-up to President-elect Joe Biden's inauguration Wednesday.