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Analysis: The pace of Fed balance sheet reduction is slowing, now shrinking to $6.70 trillion

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2025-05-11 01:24:25
According to The Kobeissi Letter analysis, the Fed's balance sheet shrank by $17 billion last month to $6.70 trillion, the lowest level since April 2020.
The Fed has shrunk its balance sheet by 25% since April 2022 by $2.30 trillion. That's about 48% of the $4.80 trillion the Fed bought during its post-epidemic response. The Fed currently holds $4.20 trillion in Treasuries and $2.20 trillion in mortgage-backed securities (MBS).
In March, the Federal Reserve announced that it would slow the average pace of quantitative tightening (QT) from $60 billion a month to $40 billion. This is evidence that the pace of the Fed's balance sheet reduction is slowing.
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