Fed Slows Balance Sheet Reduction: New Cap Set at $6.7 Trillion

The Federal Reserve has adjusted its balance sheet reduction pace, shrinking to $6.7 trillion as of April 1st, 2025. This change signifies a shift in monetary policy that will impact financial markets and reserves. The FOMC reduced the monthly redemption cap on Treasury securities from $25 billion to $5 billion, marking a significant departure from past policies. This move began in mid-2024 and affects the reinvestment strategy that has been in place since early 2022. Analysts note this decision reflects a larger effort to stabilize financial markets and ensure a stable environment.