In March, the minutes of the FOMC meeting unveiled a quiet tug -of -war in the Federal Reserve Bank. Central Bank recently decided to drop the financial leaks from $ 25 billion a month to $ 5 billion by slowly slowing down the loan conjugation, which is also known as quantitative tightening (QT). This movement has been extensive, but it shows that there is no internal push bag. Some policy makers, including Governor Christopher Waller, were not satisfied with slowing and preferred the original QT face.
Debt upper limit is about rapid policy movement.
QT’s slowdown was greatly influenced by uncertainty over US debt limit. According to the New York Fed’s officials’ officials, slowing down the drawdown would act as a buffer and help to preserve liquidity for a limited period of government borrowing. The Fed aims to prevent the sharp decline in reserves that can follow the resolution of the debt upper limit.
At the March 18-19 meeting, the central bank decided to reduce the financial leak limit by maintaining a $ 35 billion upper limit for mortgage loans. This approach provides flexibility to manage the money market situation by monitoring the extensive economic impact of federal debt management.
Fed signals the long -term transition of strategy
President Jerome Powell and New York President John Williams pointed out that QT’s reduced speed could continue even after the debt -free problem was resolved. POWELL emphasized that QT speed QT extended the timeline before the reserves were short, so that the Fed could make a decision based on a clear understanding of the market situation. Williams pointed out that a gradual approach allowed time to avoid unnecessary confusion and accurately evaluate liquidity.
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The encryption market continues to react
The encryption market has been stably maintained by the Fed’s reaction. Assets such as Bitcoin and Ethereum showed minimal volatility while paying attention to decisions rather than concerns. The Fed has slowed the QT to maintain the liquidity of the system, which can be advantageous for dangerous assets such as cryptocurrency.
There is a major focus on the federal fund, but the Fed’s QT approach continues to affect more broader market sentiment. Analysts expect Qt to expand to next year. In particular, financial conditions are kept fragile due to the global trade uncertainty and potential changes of the US fiscal policy.
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FAQ
The market is currently looking forward to cuts of 2-3 interest rates in 2025, depending on inflation trends and economic data.
The Fed usually publishes policy decisions at 2 pm after the FOMC meeting.
Fed Minutes are detailed summers of the FOMC discussion announced three weeks after each meeting.