Source: Macroeconomic Policy News
by David Beckworth
“The FOMC brought quantitative tightening (QT) to an end at its December 2025 meeting. In doing so, it reaffirmed something that has become increasingly clear over the past decade: the structural size of the Fed’s balance sheet keeps ratcheting higher after each round of QE. It all feels a bit like déjà vu. As Bill Nelson noted, the Fed now believes it needs roughly $3 trillion in reserve balances to operate its floor system, implying a minimum securities portfolio of about $6 1/2 trillion once currency in circulation and the Treasury General Account are taken into account. What stands out is not just the size of that number, but its direction.” (01/13/26)
https://macroeconomicpolicynexus.substack.com/p/deja-vu-at-the-federal-reserve