Market liquidity concerns cloud end of Fed's balance sheet drawdown
Update: 2025-10-28
Description
**Summary:**The Federal Reserve's balance sheet reduction policy is under scrutiny, with many expecting it to end soon due to rising money market rates and increased use of the Standing Repo Facility. If the Fed halts its bond reduction, it could lead to immediate reactions, including market interventions and potential dissenting votes. Longer term, some banks and economists predict the Fed may need to start buying bonds again by 2026 to maintain market stability and control interest rates. The next few months will be crucial for markets and policymakers as these decisions could significantly impact stock prices and borrowing costs for Americans.
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