Institution: The Federal Reserve may announce the end of quantitative tightening next week

Jinse Finance reported that economists at research institution Wrightson ICAP pointed out that signs of funding pressure emerging in the repo market may prompt the Federal Reserve to announce a halt to the reduction of its bond holdings at next week’s interest rate decision. Federal Reserve Chairman Powell had already hinted earlier this month that the Fed is waiting for the right time to end balance sheet reduction, and the slight fluctuations in the repo market last week may serve as a key signal. The institution also expects the Federal Reserve to begin purchasing U.S. Treasuries to offset maturing mortgage-backed securities, thereby maintaining the overall size of its balance sheet. In summary, as the Federal Reserve shifts to a neutral policy stance, the monthly supply of short-term Treasury bonds in the market may decrease by about $2 billion.