--- title: "Will the \"tapering\" era come to an end? As the money market faces urgency, the Federal Reserve is expected to end QT this week" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/263053292.md" description: "The market expects that the Federal Reserve will end its three-year quantitative tightening (QT) this week to alleviate funding pressures in the money market. Since the initiation of QT in June 2022, the Federal Reserve has allowed over $2 trillion in Treasury and mortgage-backed securities to mature without reinvestment. Former Federal Reserve Vice Chairman Rich Clarida stated that although no formal decision has been made, the market widely anticipates that QT will conclude in December. Federal Reserve Chairman Jerome Powell also hinted at a second consecutive month of a 25 basis point rate cut" datetime: "2025-10-28T09:58:22.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/263053292.md) - [en](https://longbridge.com/en/news/263053292.md) - [zh-HK](https://longbridge.com/zh-HK/news/263053292.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/263053292.md) | [English](https://longbridge.com/en/news/263053292.md) # Will the "tapering" era come to an end? As the money market faces urgency, the Federal Reserve is expected to end QT this week **The market expects that the Federal Reserve will end its three-year quantitative tightening (QT) this week, aiming to relieve pressure on banks amid growing concerns about tightening funding in the money market.** **Earlier this month, some bank-like lending institutions utilized a federal emergency financing tool at levels comparable to those during the COVID-19 pandemic.** Since launching the QT program in June 2022, the Federal Reserve has allowed over $2 trillion in U.S. Treasury and mortgage-backed securities to mature naturally from its balance sheet without reinvestment, tightening the financing environment. Krishna Guha, Vice President of Evercore ISI, stated, “**The Federal Reserve will end QT this month, which has quickly become a market consensus.**” “This is a tough decision,” said former Federal Reserve Vice Chairman Rich Clarida, now at Pimco. “**Even if we don’t get a formal decision, we will receive a very strong signal that they will end QT in December.**” Federal Reserve Chairman Jerome Powell indicated earlier this month that the central bank would end QT “in the coming months,” and his remarks clearly suggested **an intention to cut rates by 25 basis points for the second consecutive month.** Amid signs of weakness in the labor market and diminishing concerns that the trade war would drive up inflation, the market has almost fully priced in expectations that the Federal Reserve will lower the federal funds target rate range to 3.75-4% on Thursday. QT is the reverse operation of the Federal Reserve's quantitative easing (QE) policy, which was last employed during the COVID-19 pandemic to avoid economic and financial crises. Since 2009, the Federal Reserve has repeatedly used QE and QT as tools to influence the financing environment. QE refers to the central bank increasing the money supply in the economy by purchasing assets such as bonds or mortgage-backed securities. This mechanism helped support market confidence during periods of financial stress, such as after the collapse of Lehman Brothers. In contrast, under QT, the Federal Reserve allows the bonds it purchased to be removed from its balance sheet upon maturity without repurchasing them. In April of this year, the Federal Reserve slowed the pace of QT, reducing its monthly sales of U.S. Treasuries from $25 billion to $5 billion. Meanwhile, its monthly sales of mortgage-backed securities remained capped at $35 billion. **This reduction operation withdraws liquidity from the banking system**, meaning that the reserves held by lending institutions at the Federal Reserve decrease—making financing costs more susceptible to upward pressure. Federal Reserve officials previously agreed that QT would end once the U.S. banking system showed signs of transitioning from a state of “ample” liquidity to having “adequate” reserves. Officials defined the “adequate” state as a level of liquidity that is just right, allowing banks to meet their financing needs at prices consistent with official benchmark rates, but without an excess of cash Despite the lack of widespread signs of stress at present, **the usage of the New York Fed's standing repo facility—a tool for emergency support that charges a higher rate than the central bank's benchmark—has recently reached levels seen during the pandemic.** Guha stated, “Evidence from the money markets tells you that you are either very close to transitioning from a state of 'abundant' liquidity to 'adequate,' or you may already be in it.” Analysts believe that **the Federal Reserve may also want to take action now to avoid repeating the mistakes of September 2019 during the last quantitative tightening experiment**, when short-term financing costs for banks soared above the Fed's target range. Diane Swonk, chief economist at KPMG, said, “**The biggest factor driving the Fed to act is the fear of a liquidity shock.**” The Fed's use of its balance sheet has been controversial. While QE prevented a market collapse during the pandemic, critics argue that it also led to the most severe inflation surge in a generation. Currently, the Fed's balance sheet stands at $6.59 trillion, still over $2 trillion higher than before the pandemic. In contrast, during the 2008 global financial crisis, this figure was less than $1 trillion. Swonk remarked, “Reducing the balance sheet is not as easy as expanding it. The overnight lending market that existed before the financial crisis is no longer there.” U.S. Treasury Secretary Yellen recently criticized the Fed's QE program as “deviating from its mission” and claimed that its balance sheet policies exacerbated inequality, a charge that Fed officials have denied ## 相關資訊與研究 - [Trump weighs broader cabinet shake-up as Iran war pressure grows](https://longbridge.com/zh-HK/news/281681817.md) - [Omeros Turns Corner With Novo Deal, YARTEMLEA Launch](https://longbridge.com/zh-HK/news/281666535.md) - [Kepler Capital Sticks to Its Buy Rating for Banco Comercial Portugues (0RJN)](https://longbridge.com/zh-HK/news/281671078.md) - [Easter candy prices surge again, leaving buyers with less](https://longbridge.com/zh-HK/news/281664015.md) - [How to interpret the wild swings in the jobs numbers](https://longbridge.com/zh-HK/news/281681321.md)