A key question for markets when it comes to the Fed’s balance sheet is what is the optimal terminal size it should be targeting. Goldman Sachs economist David Mericle has written this piece that looks at a range of scenarios. For instance, what is the minimum size necessary to implement monetary policy, consistent with its current guidance? Or will the Fed decide to maintain a significantly higher level of reserve balances than before the crisis for reasons related to regulatory needs, monetary policy considerations, and/or crisis management? Mericle provides his estimates of terminal (% of GDP) and the probable time frame. Goldman clients can view the full note via Goldman 360.