Wall Street expects the Federal Reserve to end its balance sheet reduction this year, but the likelihood of an abrupt halt is low.

According to Jin Shi data on August 9th, the Fed’s end of balance sheet reduction depends on the pace of interest rate cuts and the pressure of the financing market. Policymakers hinted that they would complete the reduction of US debt holdings before the end of the year, and many people on Wall Street believed that quantitative tightening was unlikely to end suddenly. However, recent weak economic data and liquidity pressure risks have cast uncertainty over the outlook. ‘If the Fed intends to stimulate the economy, it may stop reducing the balance sheet,’ wrote Bank of America strategists Mark Cabana and Katie Craig in a report to clients on Wednesday. ‘If the Fed’s goal is to normalize monetary policy, then the reduction of the balance sheet can continue.’ Increasing signs indicate that the economic rise is slowing faster than expected a few weeks ago, triggering a significant pump in global bonds on Monday, and traders are betting that the Fed and other central banks will become more active in interest rate cuts. Morgan Stanley analysts wrote, ‘Two possible driving factors may prompt the Fed to end the balance sheet reduction early, one is the depletion of monetary market liquidity, and the other is a US economic recession. However, we believe that both are unlikely to occur.’