MNI Fed Balance Sheet Tracker: Feb 27, 2025

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Fed Sets Stage For QT “Pause”

• Fed balance sheet runoff policy is set to shift in 2025 – and perhaps slightly earlier than the mid/late year dates previously anticipated. A pause in QT looks increasingly likely, perhaps announced by May.
• We go through the current state of the Fed’s balance sheet with a stylized scenario of reserve balances over the next six months.
• We also update on market expectations for QT’s end: while there is increasing focus on a QT pause/slowdown announced by May’s FOMC meeting, there remain some expectations that the Fed can wait until after the summer before calling time on balance sheet rundown, either temporarily or permanently.