Navigating quantitative tightening: The Fed’s delicate balancing act

As the US Federal Reserve pivots away from interest-rate cuts, the focus shifts to navigating quantitative tightening at next week's policy meeting. With vast securities portfolios impacting economic activity, a strategic plan is imperative. Uncertainty looms regarding the threshold for scarce reserves, reminiscent of landing a plane with an imprecise altimeter. The Fed must carefully adjust its rate of descent, mindful of market stability and future quantitative easing capabilities. Discover the intricacies shaping monetary policy in this insightful analysis.

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By Bill Dudley

With interest-rate cuts off the table for now, the US Federal Reserve will focus on a different topic at next week's policy-making meeting: when and how to slow quantitative tightening, the process of reducing the vast securities portfolio amassed in previous efforts to support economic activity.

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