From Yahoo Finance: 2025-03-19 14:46:00

The Federal Reserve plans to slow the pace of its balance sheet reduction, lowering the cap on Treasury securities allowed to mature without reinvestment to $5 billion from $25 billion. Chair Jerome Powell cited money market tightness as a key factor, with Fed Governor Christopher Waller dissenting on the move.

As the US grapples with the debt ceiling, the Fed’s decision to adjust its balance sheet policies aims to maintain market stability. Wall Street strategists had varied expectations on the Fed’s actions, with ongoing discussions within the Fed about pausing or slowing the balance sheet reduction process until the debt ceiling issue is resolved.

The Fed’s adjustment to its balance sheet policy reflects a cautious approach to managing reserves and money market signals, with the potential for re-acceleration of balance sheet reduction once the debt ceiling matter is settled. The decision underscores the Fed’s commitment to maintaining financial system stability amidst uncertain economic conditions.

Read more: Fed to Shrink Balance Sheet at Slower Pace Until Debt-Ceiling Deal Reached