Federal Reserve Expected to Conclude Quantitative Tightening Amid Market Concerns

According to BlockBeats, the Federal Reserve is anticipated to end its three-year quantitative tightening phase this week, aiming to alleviate pressure on banks amid concerns over tight monetary market conditions. Earlier this month, some banking institutions resorted to the federal reserve financing mechanism, reaching levels seen during the pandemic. Policymakers are set to discuss this on Tuesday. Since the initiation of the quantitative tightening program in June 2022, the Federal Reserve has allowed over $2 trillion in U.S. Treasuries and mortgage-backed securities to roll off its balance sheet, resulting in tighter financing conditions. Krishna Guha, Vice President of Evercore ISI, stated that the market largely agrees that the Federal Reserve will conclude quantitative tightening this month. Richard Clarida, a director at Pacific Investment Management Company (PIMCO) and former Federal Reserve Vice Chairman, noted that the decision will be closely contested. However, even without a formal resolution, there will be strong indications that the Federal Reserve will terminate quantitative tightening by December.