The Federal Reserve recently saw its balance sheet shrink by $17 billion last month, falling to $6.7 trillion – a level not seen since April 2020. Since April 2022, the Fed has reduced its holdings by $2.3 trillion, representing a 25% decrease. This reduction accounts for roughly 48% of the $4.8 trillion purchased during the pandemic response period. Currently, the Federal Reserve holds $4.2 trillion in U.S. Treasury securities and $2.2 trillion in mortgage-backed securities (MBS). In March, the Fed announced a slower pace of quantitative tightening (QT), decreasing the average monthly reduction from $60 billion to $40 billion – signaling a slowdown in shrinking the balance sheet.