Journal Article

Assessing Market Conditions ahead of Quantitative Tightening

Abstract: Quantitative tightening (QT)—the reduction in the Federal Reserve’s balance sheet—will transfer a significant amount of Treasury and agency mortgage-backed securities to investors. This transfer will be larger than the first endeavor with QT in 2017 and will occur at a time when financial markets are strained, suggesting this round of QT has the potential to be more disruptive compared with the benign start to the 2017 runoff.

Keywords: Quantitative Tightening; Federal Reserve Balance Sheet; Monetary Policy;

JEL Classification: E58; E52;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2022-07-11

Issue: July 11, 2022

Pages: 4