US Fed plans to complete balance sheet reduction by February next year

According to the minutes of the US Federal Reserve's (Fed) June 17–18 meeting published on Wednesday, financial market participants have once again postponed the expected completion date for the reduction of the central bank's balance sheet. This information was provided by Yahoo Finance.

As noted in the minutes, major banks and money funds informed the Fed ahead of the June meeting that the bond portfolio reduction will likely conclude in February. By that time, the balance sheet is expected to reach $6.2 trillion.

Previously, market participants had anticipated the Fed's quantitative tightening (QT) would end by late this year. However, the central bank had earlier slowed the pace of monetary contraction in the market. Simultaneously, the Treasury Department was taking measures to meet government fiscal needs amid debates about the debt ceiling and budget expenditures.

Currently, the Fed's reserve volume stands at $3.3 trillion. Market participants believe a reduction to $2.9 trillion by Q4 this year is quite possible. Respondents also stated that the reverse repo amount should decline to low levels. On Wednesday, it stood at $227 billion.