Markets See Fed’s Exit From Quantitative Tightening Nearing
- Participants said time to discuss what would guide end of QT
- Central bank has been shrinking balance sheet since June 2022
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The Federal Reserve is trying to find the right time to start deliberating about how it will extract itself from its balance sheet unwind, a signal that the end might be closer than previously expected.
In the minutes of last month’s Federal Open Market Committee meeting, several participants suggested it would be appropriate to begin discussing the technical factors that would determine when the US central bank slows the pace of its balance sheet runoff, a process known as quantitative tightening. Participants remarked the Committee’s plans indicated it would slow and then stop shrinking its balance sheet when reserve balances are “somewhat above the level judged consistent with ample reserves.”