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Fed’s balance sheet signals cautious but consistent quantitative tightening Fed’s balance sheet signals cautious but consistent quantitative tightening

Fed’s balance sheet signals cautious but consistent quantitative tightening

The Federal Reserve is persisting with gradual quantitative tightening, shrinking its balance sheet by only $6 billion in the latest update.

Quick Take

The Federal Reserve’s balance sheet has undergone a recent update, revealing a quantifiable decrease in its total. As of Nov. 8th, the balance sheet reveals a total of $7.861T, indicating the continuation of the Federal Reserve’s quantitative tightening strategy. Notably, the balance sheet has seen a reduction of about $6B in the last week.

Weekly Change in Fed Balance Sheet :(Source: FRED)
Weekly Change in Fed Balance Sheet :(Source: FRED)

This reduction, however slight, is essential to note as it is one of the slightest week-over-week changes effected by the Federal Reserve. To put it into perspective, it ranks as the fifth smallest reduction in a span of the past 20 weeks. This information is crucial as it illustrates the Federal Reserve’s consistent, albeit slow, progress towards a tightened balance sheet. The implications of these changes, while not immediate, will be significant for financial markets in the long run as they reflect the Federal Reserve’s monetary policy adjustments.

Fed Balance Sheet :(Source: FRED)
Fed Balance Sheet :(Source: FRED)