There are growing calls for the Fed to raise interest rates by 25 basis points four times this year, and there is almost a consensus on the first rate hike in March.

Goldman Sachs Group recently raised the number of interest rate increases expected by the Federal Reserve this year from three to four. JPMorgan Chase & Co even thinks that there will be more than four interest rate increases this year. Today, CEO Dimon is even more "amazing", saying that the Federal Reserve may raise interest rates six or seven times this year.

The Fed's "tightening" timetable and roadmap Wall Street leaders have come up with the answer, so the next question is how much the Fed's future shrinking schedule will be.

Friday Eastern timeDeutsche Bank predicts that once the quantitative tightening of QT begins, the Fed's balance sheet will shrink from the current $9 trillion to $6 trillion.

As Deutsche Bank's Jim Reid pointed out before, citing forecasts from the bank's economist Matt Luzzetti and interest rate strategist Steven Zeng, he said that after the end of the quantitative easing QE in March, the Fed's balance sheet will peak, slightly less than $9 trillion, and then fall back, from the current more than 35% of GDP to nearly 20%, and about 1/3 smaller than this peak. It will reach about $6 trillion by then.

Historically, Reid pointed out that between October 2017 and August 2019, QT would reduce the Fed's balance sheet by about $700 billion, from about $4.47 trillion to $3.76 trillion, when the Fed realized it did not have enough reserves, followed by a buyback crisis and a "non-QE".

Deutsche Bank reports that a reduction of $6500 to $700 billion is equivalent to an interest rate hike of about 0.25 per cent, so by the end of 2023, they think the Fed's cutback policy is equivalent to about 2.5 rate hikes.

Reid said his personal view is:

Over the next few years, the balance sheet will have to grow sharply again, as the Fed is forced to use financial repression (policies or instruments) to sustain the growing public debt burden.

The fed is increasingly trapped here, too, because while it may have no choice but to turn to doves, it has a chance to turn dovish in 2018 as inflation falls below 2 per cent. As Reid concludes, "will they have the flexibility of choice this time?"

Earlier, UBS analysts said the Fed's retrenchment action could target three years, starting at the beginning or middle of this year, ending with a balance sheet reduction of less than $3 trillion and accounting for about 25 per cent of GDP by the second half of 2025. The Fed is likely to take a step-by-step approach, initially shrinking $10 billion of Treasuries and $5 billion of mortgage-backed bonds (MBS) each quarter, rising to $20 billion and $10 billion respectively by the first quarter of 2023.