The Fed's Balance Sheet Normalization Nearing Completion, Money Markets Showing Stress Signals
BlockBeats News, October 28th, the Federal Reserve is expected to end its three-year quantitative tightening phase this week, easing bank pressure amid concerns of excessive tightness in the money market. Earlier this month, some bank lending facilities tapped into the Federal Reserve's discount window, reaching levels last seen during the pandemic.
Policymakers will discuss this on Tuesday. Since launching the quantitative tightening plan in June 2022, the Federal Reserve has allowed over $2 trillion of U.S. Treasuries and mortgage-backed securities to roll off its balance sheet, tightening financing conditions.
Evercore ISI Vice Chairman Krishna Guha said, "The market has broadly coalesced around the view that the Fed is going to end its QT this month."
Current PIMCO Director and former Fed Vice Chair Clarida noted, "This will be a close call. But even absent a formal decision, we should get strong signals that the Fed will conclude QT in December." (FX Street)
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