Analysis: The Federal Reserve (FED) is slowing the pace of balance sheet reduction, which has now shrunk to $6.7 trillion.

2025-05-11 02:14:58

On May 11, according to analysis from The Kobeissi Letter, the Federal Reserve’s balance sheet decreased by $17 billion last month to $6.7 trillion, the lowest level since April 2020. Since April 2022, the Federal Reserve has reduced its balance sheet by $2.3 trillion, a decrease of 25%. This accounts for about 48% of the $4.8 trillion purchased by the Federal Reserve during the pandemic response. The Federal Reserve currently holds $4.2 trillion in Treasury securities and $2.2 trillion in mortgage-backed securities (MBS). In March, the Federal Reserve announced it would slow the average pace of quantitative tightening (QT) from $60 billion per month to $40 billion. This indicates that the pace of the Federal Reserve’s balance sheet reduction is slowing.

MBS-43,36%

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