Analysis: The Pace of the Federal Reserve's Balance Sheet Reduction is Slowing, Now Reduced to $6.7 Trillion

According to The Kobeissi Letter analysis, 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 approximately 48% of the $4.8 trillion purchased by the Federal Reserve during the post-pandemic response period. 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 that 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 down.