RIYADH: In an attempt to combat inflation, the US Federal Reserve is all set to start shrinking its $8.9 trillion balance sheet, according to a Bloomberg report. This move is considered the second tool, after higher interest rates, to find a solution to looming inflation, even though officials do not know how effective it will be. The Fed has doubled its size through asset purchases in the first two years of the COVID-19 pandemic and the balance sheet will be reduced at a pace that is almost twice as fast as after the last financial crisis. Even though this process will officially commence on Wednesday, the first US Treasury securities won’t run off until $15 billion mature on June 15. The Bloomberg report noted that the Fed is capping a monthly runoff at $47.5 billion which comprises $30 billion for Treasuries and $17.5 billion for mortgage-backed securities until September. These thresholds will be then doubled to a combined $95 billion. Officials believe that reduction will work in tandem with interest-rate increases to reduce inflation by tightening financial conditions.