Federal Reserve Pause on Balance Sheet Reduction Expected This Month

JPMorgan Chase and Bank of America strategists predict that the Federal Reserve will halt its reduction of the approximately $6.6 trillion balance sheet this month. The process, designed to withdraw liquidity from financial markets, is expected to conclude earlier than initially planned, with recent increases in U.S. dollar funding costs influencing these revisions. The banks had previously projected the balance sheet reduction, initiated in June 2022, would continue until December or early next year.