The Federal Reserve may soon expand its balance sheet through increased bond purchases, according to remarks from Williams, an official at the Fed. The recent decision to pause the reduction of their holdings suggests this next step is likely. Williams explained that assessing when reserves transition from slightly above adequate to fully adequate will trigger a gradual asset purchase process. He believes this shift in reserve levels is imminent, though pinpointing the exact timing remains challenging. Williams notes current market pressures in the repo market and other indicators suggest reserves are transitioning towards adequately sufficient levels. Some analysts predict that the Fed could begin expanding its asset size through bond purchases as early as the first quarter of next year. Williams cautions against expecting specific dates due to difficulty pinpointing timing, and emphasizes he is closely monitoring various market indicators related to the federal funds market, repo market, and payments to assess reserve demand. He also cautions that maintaining liquidity through bond purchases is not a stimulus measure.