🔥✔Federal Reserve's potential shift to short-term securities could stabilize inflation and liquidity. This strategy may enhance market confidence and support economic growth✔

According to BlockBeats, Federal Reserve official Schmid stated that further interest rate cuts could have a lasting impact on inflation. The Fed may also shift its balance sheet investments towards short-term securities.

The Federal Reserve can support a smaller balance sheet and alleviate liquidity pressures by lowering reserve interest rates and easing the use of standing repo facilities. There is little reason to believe that reserve demand will increase steadily with nominal GDP growth.