JPMorgan Chase and Bank of America predict that the Federal Reserve will end its balance sheet early this month
2025-10-23 15:30:37
JPMorgan and Bank of America strategists expect the Federal Reserve to stop shrinking its balance sheet by about $6.60 trillion this month, bringing an early end to a process aimed at withdrawing liquidity from financial marekts. Both banks have brought forward their forecasts for the Fed to end quantitative tightening due to the recent rise in borrowing costs in the dollar funding market. They had expected the balance sheet reduction, which starts in June 2022, to continue until December or early next year. Fed officials are widely expected to decide the direction of the balance sheet at next week's interest rate decision. While a 25 basis point rate cut is seen as a high probability event, Wall Street remains divided on when policymakers will end quantitative tightening. The likes of TD Securities and Mizuho Securities have moved their forecasts forward to October, while analysts at Barclays and Goldman Sachs believe the end date will be later.
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