The Federal Reserve’s upcoming September meeting minutes could shed light on its potential decision regarding the ongoing balance sheet reduction program. The Fed has been gradually shrinking its balance sheet to unwind pandemic-era stimulus measures. However, recent shifts in the interest rate market suggest tightening financing conditions, potentially indicating that the balance sheet size is nearing its desired level. Economists from Citigroup highlight this trend: ‘As liquidity decreases, volatility in short-term interest rates has increased. This may have prompted officials to at least discuss the possibility of ultimately ending the balance sheet reduction,’ they said.