Institution: The Federal Reserve's combination of interest rate cuts and balance sheet cuts may boost market risk appetite
2025-10-28 00:55:28
The Fed's policy committee is likely to take two decisive dovish steps simultaneously on Wednesday: implement a 25 basis point rate cut and signal further easing, while announcing the end of the balance sheet reduction plan (a move that could put downward pressure on Treasury yields). Derek Tang, analyst at LHMeyer, a Fed watcher, pointed out that the dual action of interest rate cuts (superimposed on expectations of subsequent easing) and early cessation of balance sheet reduction will provide significant support for market risk appetite. He added that while there is still uncertainty about whether to end balance sheet reduction this week, the recent tightening of the financing market makes this decision significantly more likely. (Jin Ten)
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