Deutsche Bank Forecasts Fed Balance Sheet Expansion in Early 2026

Deutsche Bank predicts the Federal Reserve will resume balance sheet expansion in early 2026, signaling a shift toward looser monetary policy. This move follows the end of the Fed’s quantitative tightening process on December 1st. The bank highlights that slowing U.S. economic activity and tight liquidity pressures could lead to this change sooner than anticipated, potentially reviving quantitative easing (QE). This would involve large-scale purchases of government and mortgage securities to boost liquidity and stabilize markets.