Fed’s QT Slowdown: A Comedy of Errors or Just Another Day at the Office?

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So, the March FOMC meeting minutes are out, and guess what? There’s a little drama brewing at the Federal Reserve. It’s like watching a bunch of economists argue over the last slice of pizza. They’ve decided to hit the brakes on their balance sheet reduction—quantitative tightening, or QT for those in the know. They’ve gone from a $25 billion Treasury runoff cap to a measly $5 billion. I mean, come on! What’s next, a bake sale to fund the economy? 🍕

We have posted the minutes from the #FOMC meeting held March 18-19, 2025:

— Federal Reserve (@federalreserve) April 9, 2025

Debt Ceiling Drama: The Plot Thickens

Now, why the slowdown? Well, it seems the debt ceiling is causing more anxiety than a first date. A New York Fed official suggested that slowing down the drawdown would help keep liquidity flowing like a good cup of coffee—strong and steady. They’re trying to avoid a situation where reserves drop faster than my patience at a DMV. 🚦

During the March 18–19 meeting, they decided to ease up on the Treasury runoff limit while keeping the $35 billion cap on mortgage bond drawdowns. It’s like saying, “Sure, we’ll take it easy on the spending, but we’re still going to keep the mortgage payments coming.” Talk about mixed signals! 🤷‍♂️

Fed’s Long-Term Strategy: A Slow Dance

Fed Chair Jerome Powell and New York Fed President John Williams are hinting that this slower pace of QT might stick around even after the debt ceiling drama is over. Powell’s all about extending the timeline before reserves get scarce, which sounds great, but let’s be honest—who doesn’t love a good cliffhanger? Williams is on board too, saying a gradual approach helps avoid unnecessary disruptions. It’s like they’re trying to avoid a financial traffic jam. 🚗💨

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Crypto Market: Steady as She Goes

The crypto market is just sitting there, calm and collected, like it’s at a yoga retreat. Bitcoin and Ethereum are barely moving, which is surprising given the Fed’s cautious approach. By slowing QT, they’re keeping liquidity in the system, which is like giving a lifeline to riskier assets. Who knew the Fed could be so generous? 💸

Even though everyone’s still focused on the federal funds rate, the Fed’s QT strategy is sending ripples through the market. Analysts are now saying QT could drag on into next year. It’s like waiting for a sequel to a movie you didn’t even like the first time. 🎬

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FAQs

How many Fed cuts in 2025?

Markets currently expect 2–3 rate cuts in 2025, depending on inflation trends and economic data.

What time is the Fed announcement?

The Fed typically announces policy decisions at 2:00 p.m. ET after FOMC meetings.

What are Fed meeting minutes?

Fed minutes are detailed summaries of FOMC discussions, released three weeks after each meeting.

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2025-04-10 09:23