Deutsche Bank analyst George Saravelos said in a report that the dollar could weaken if the Federal Reserve shifts its policy focus from rate hikes to balance-sheet reduction, or quantitative tightening, to tighten monetary policy. According to Jin10, he pointed to Japan's experience, saying that although the Bank of Japan has raised rates slowly, it has been withdrawing liquidity through quantitative tightening at a record pace while the yen remains near historic lows.
He also said shrinking the balance sheet could clash with U.S. President Donald Trump's administration, which has made clear that it wants long-term Treasury yields to remain low. Saravelos added that market attention continues to focus on the Bank of Japan's independence, and Japan's Finance Minister Satsuki Katayama has even discussed using domestic savings to support the Japanese bond market.
Deutsche Bank: Dollar May Weaken If the Fed Chooses Quantitative Tightening Over Rate Hikes
2026-07-16 12:50:58
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