The Federal Reserve's decision to end Quantitative Tightening (QT) as of December 1, 2025, marks a significant shift in monetary policy, aligning closely with the details you've outlined.
This move halts the balance sheet runoff that began in mid-2022, after reducing holdings by approximately $2.4 trillion, leaving the sheet stabilized at around $6.57 trillion. Instead of allowing maturing securities to roll off, the Fed will now reinvest them, effectively pausing the liquidity drain from the system.
The accompanying $13.5 billion liquidity injection into banks via overnight repo operations is one of the largest since the COVID era, aimed at smoothing short-term funding markets and preventing strains in credit availability. This isn't outright Quantitative Easing (QE), but it signals a more supportive stance, especially as the Fed's operating income has turned positive for the first time in three years.
Looking ahead, analysts interpret this as paving the way for potential easing measures, possibly including a QE restart in early 2026, depending on economic data like inflation and employment trends. The upcoming Fed meeting on December 9โ10 could provide more clues, with markets pricing in a possible rate cut, though QT's end is already seen as a major liquidity boost.
For investors in risk assets, this removes a key headwind: QT had been a drag on liquidity-sensitive markets, and its conclusion could fuel rallies in equities, emerging markets, and especially cryptocurrencies. Assets like $POL (Polygon) and meme coins such as $TRUMP may see heightened volatility and upside potential, as looser liquidity often amplifies speculative flows into crypto.
However, risks remain if inflation reaccelerates or geopolitical tensions rise, potentially delaying any pivot to full QE. Overall, this feels like the start of a more accommodative phaseโkeep an eye on bond yields and repo rates for early signals. @Cryptonews_Official @Crypto Universe official
