Published On: Mon, Dec 11th, 2023

Fed Quantitative Tightening (QT) Slowing Seen Starting in June, Wrightson Says

Fed Quantitative Tightening (QT) Slowing Seen Starting in June, Wrightson Says
Fed Quantitative Tightening (QT) Slowing Seen Starting in June, Wrightson Says


The Federal Reserve will need to start hitting the brakes on the unwind of its balance sheet as the outlook for the central bank’s reserves grows increasingly murky, according to Wrightson ICAP.

For the past 18 months, the Fed has been letting Treasuries of up to $60 billion and agency debt holdings of up to $35 billion mature every month. A more cautious approach could lead the central bank to slow the pace of quantitative tightening or QT after the Fed’s June gathering with the central bank then reducing the monthly cap for Treasuries allowed to run-off to $30 billion in the third quarter of 2024, the research firm’s economist Lou Crandall said. The unwind of mortgage-backed securities he expects will continue at the current pace for the time being.


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