Market analysis: The Federal Reserve may consider restarting reserve-managed bond purchases
2025-12-10 18:23:45
Some analysts believe that in addition to guiding interest rates down, the Federal Reserve may decide at today's meeting to start expanding its holdings of US Treasuries. But the purpose of this move is different from quantitative easing during the financial crisis or the COVID-19 pandemic epidemic - not to stimulate the economy, but to ensure that the amount of bank reserves can be maintained in line with economic growth. (If the size of the Federal Reserve's balance sheet remains unchanged, as the public's demand for cash continues to rise, the reserves in the banking system will gradually decrease.) In a recent speech, New York Federal Reserve President Williams said that the Fed may soon enter a stage where it is suitable for such an operation. However, it should be noted that the announcement of the resumption of such bond purchases at today's meeting is not a sure thing.
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