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yesterday

Powell Says Fed Could Halt Balance-Sheet Runoff Within Months

He framed the timing around preserving ample reserves to keep short‑term rates under firm control.

U.S. Federal Reserve Chair Jerome Powell speaks during a press conference, following the issuance of the Federal Open Market Committee's statement on interest rate policy, in Washington, D.C., U.S., September 17, 2025. REUTERS/Elizabeth Frantz/File Photo
Fed Chair Jerome Powell Speaking on Sept. 17, 2025 at FOMC Press Conference

Overview

  • After shrinking assets from roughly $9 trillion to about $6.6 trillion since 2022, the Fed is monitoring liquidity gauges as signs of tighter conditions emerge.
  • Powell cited firmer repo rates and temporary funding pressures on select dates as indicators that reserves are approaching the threshold the Fed considers ample.
  • The runoff has already slowed, with monthly caps since April of $5 billion for Treasuries and $35 billion for mortgage-backed securities.
  • Markets continue to price additional easing this year, including two more 25-basis-point cuts, even as Bitcoin trades weak and options show bearish positioning.
  • Powell defended the ample-reserves framework, warned against removing the Fed’s interest-paying authority, and said the balance sheet can be used more nimbly in the future.