Fed Decision Preview: More Important than Rate Cut is Balance Sheet Signal

By: theblockbeats.news|2025/12/09 17:16:01
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BlockBeats News, December 9th. According to foreign media analysis, the Federal Reserve officially ended its balance sheet reduction on December 1st. Bank reserves have dropped to historically tight financing-related levels, and the Secured Overnight Financing Rate (SOFR) has periodically tested the upper limit of the policy rate corridor. The U.S. banking system is gradually experiencing liquidity stress. Against this backdrop, the most important signal from the FOMC may not be a 25 basis point rate cut, but rather the direction of its balance sheet strategy. The Federal Reserve is expected to clearly outline, either directly or through its implementation statement, how it intends to transition to a Reserve Management Purchase (RMP) plan. According to Evercore ISI, this plan could potentially start as early as January 2026, with a monthly investment of around $35 billion in Treasury purchases, resulting in an annual balance sheet growth of over $400 billion. (Jin10)

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