Why does Fed want to reduce its balance sheet?

Could someone explain what the rationale is? How does reducing the balance sheet help inflation?

I can see the balance sheet reduction would likely lead to higher long-term interest rates (lower demand for MBS and bonds). This would mean

1. Slowing housing market (higher mortgage rates lead to reduced homebuying)

2. Lower investment (why invest if ROI is barely above bonds)

The two above would lead to a slowing economy, hence lower demand and lower inflation. Is that the reason behind Fed’s balance sheet reduction?