ACTV - Federal Reserve Watch: Quantitative Tightening Is 2 Years Old

2024-03-17 08:15:05 ET

Summary

• The Federal Reserve has been implementing quantitative tightening for two years.
• Since March 16, 2022, the Federal Reserve has reduced its portfolio of securities by approximately $1.5 trillion and raised its policy rate of interest eleven times.
• Still, the commercial banking system seems to be very flush with cash due to the quantitative easing that preceded the current monetary stance.
• So, the question is, what is the Federal Reserve going to do over the next two years?
• Can quantitative tightening be continued that far into the future?

The Federal Reserve began its program of quantitative tightening two years ago.

Since March 16, 2022, the Federal Reserve has reduced its portfolio of securities held outright by $1,456.1 billion, or, by roughly $1.5 trillion.

Note: all data from the Fed's balance sheet come from the Fed's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions."...

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