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As the Fed's balance sheet reduction nears its end, money markets are showing signs of stress
2025-10-28 05:45

Odaily Planet Daily reported that the Federal Reserve is expected to end its three-year quantitative tightening phase this week, easing pressure on banks amid concerns that money market funds are too tight. Earlier this month, some bank lenders tapped the federal reserve financing mechanism, the scale of which reached the level during the epidemic. Policymakers will discuss this on Tuesday. Since launching the quantitative tightening program in June 2022, the Federal Reserve has allowed more than $2 trillion in U.S. Treasury bonds and mortgage-backed securities to roll off its balance sheet, tightening financing conditions. Krishna Guha, vice president of Evercore ISI, said: "The market has basically reached a consensus that the Federal Reserve will end quantitative tightening this month." Clarida, current director of Pacific Investment Management Company (PIMCO) and former Federal Reserve Vice Chairman, pointed out: "This will be a close decision. But even without a formal resolution, we will get a strong signal that the Federal Reserve will end quantitative tightening in December." (Jinshi)