Overview
- The central bank will begin purchasing short‑dated Treasury bills on December 12 with an initial round of about $40 billion, with buying elevated for a few months before being scaled back.
- Officials say the operations are technical and aimed at maintaining ample reserves and firm control of the policy rate, not at providing new stimulus.
- The move follows the formal end of balance‑sheet runoff, which reduced Fed holdings from roughly $9 trillion in 2022 to about $6.6 trillion, and marks a targeted re‑expansion via bills.
- Analysts expect the purchases to ease strains in short‑term funding, including recent repo and SOFR spikes linked to heavy T‑bill issuance and a high Treasury General Account.
- Markets welcomed the added liquidity even as some investors, including Michael Burry, warned the need for large reserves signals growing banking‑system fragility.