Federal Reserve Considers Ending Balance Sheet Reduction

According to BlockBeats, the minutes from the Federal Reserve's September meeting may reveal that officials are deliberating whether to conclude the balance sheet reduction program. The Federal Reserve has been reducing its balance sheet to reverse some of the pandemic-era stimulus measures. However, economists from Citigroup have noted that movements in the interest rate market suggest that financing conditions have tightened, potentially indicating that the balance sheet size is nearing the Federal Reserve's desired level. The Citigroup team stated, "As liquidity decreases, volatility in short-term interest rates has increased. This may have prompted officials to at least discuss the possibility of ultimately ending the balance sheet reduction."