Economists Offer Differing Predictions for Quantitative Tightening
The Federal Reserve’s (Fed) schedule to reduce its balance-sheet, known as quantitative tightening (QT), is ramping up through September and possibly ending in early 2025. The plan to run off $95 billion a month has economists considering the timing and method, with some predicting an earlier end to QT. Some market participants, however, are calling that the Fed run-off could end as soon as late 2023 if too much liquidity comes out of the banking system, which could be balanced between “offloading its mortgage-backed securities at pace, while slowing the runoff of Treasuries.”