Bank of America predicts that the Federal Reserve will increase its asset holdings by $45 billion per month, expanding its balance sheet to $6.5 trillion.

Odaily Planet Daily reports that while the market is largely focused on the Federal Reserve's December interest rate decision, traders are already paying attention to whether the Fed will expand its $6.5 trillion balance sheet. Michael Kelly, Global Head of Multi-Assets at PineBridge Investments, said the market is watching whether the Fed will keep its balance sheet unchanged or begin to expand it.

Strategists at Bank of America predict that the Federal Reserve will announce this week that it will expand its balance sheet by $45 billion per month starting in January 2026. This includes at least $20 billion per month to allow for natural growth of the balance sheet, and $25 billion per month to reverse excessive reserve depletion, an action that will continue at least until the first half of 2026.

Roger Hallam, global head of rates for fixed income at Vanguard, stated that in the long term, the Federal Reserve will naturally begin purchasing short-term Treasury bonds next year due to increased economic demand for reserves. Cathie Wood had previously mentioned the easing of liquidity conditions at the Federal Reserve and reiterated Ark Invest's long-term forecast that Bitcoin's price will reach $1.5 million.