Overview
- Jerome Powell said the Fed "may approach" the point to stop quantitative tightening in the coming months and is tracking a wide range of indicators.
- He cited a general firming in repo rates and brief date‑specific pressures as signs liquidity conditions have tightened.
- The balance sheet has fallen from roughly $9 trillion to about $6.6 trillion since 2022, with runoff already slowed this year by a $5 billion monthly Treasury cap alongside a $35 billion cap for mortgage‑backed securities.
- Usage of the Fed’s reverse‑repo facility has dropped to near zero, heightening focus on reserve levels and money‑market functioning.
- Powell highlighted the Standing Repo Facility as a liquidity backstop and warned that removing the Fed’s interest‑paying authority would create significant market stress, while an American Banker op‑ed argued ongoing QT is straining bank liquidity and says reserves are now below levels seen around the 2023 SVB failure.