💵 The Fed Resumes $40B Monthly T-Bill Purchases — But It’s Not QE

On December 12, 2025, the US Federal Reserve restarted short-term Treasury bill (T-bill) purchases at a pace of $40B per month.

Fed Chair Jerome Powell clarified: this is not quantitative easing (QE). Instead, it’s a technical measure to manage bank reserves and short-term liquidity, ensuring smooth market functioning during volatile periods, especially around the year-end.

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🔹 Why the Fed Is Buying T-Bills

After quantitative tightening (QT) shrank the Fed’s balance sheet from nearly $9T, money markets showed signs of stress.

Short-term funding costs in the repo market rose, prompting the Fed to inject liquidity.

These purchases help stabilize bank reserves without materially affecting broader monetary policy.

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🔹 Reserve Management vs QE

Feature Current T-Bills QE (Past)

Scope Short-term bills Long-term securities

Purpose Stabilize reserves & short-term rates Stimulate growth & lower borrowing costs

Impact on economy Minimal Directly supportive

Example $40B/month Trillions in 2008 & 2020

Powell emphasized: this is not a policy shift, only a tool to ensure markets function smoothly.

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🔹 Market & Investor Takeaways

Equities & bond yields saw mild increases, reflecting improved liquidity expectations.

Some traders interpret this as QE-like, boosting sentiment.

Others caution: without large-scale long-term purchases, this is not QE.

Debate continues: “Stealth QE” or just liquidity management?” Mechanically similar to QE, but without explicit goals to stimulate the economy.

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🔹 Summary

Fed buying $40B in T-bills monthly to stabilize short-term liquidity.

Not classified as QE — no intention to expand the Fed’s balance sheet or stimulate growth.

Investors should monitor future Fed operations in 2026 and how markets interpret them.

⚠️ Disclaimer:

This content is educational only and not financial advice. Investing in cryptocurrencies and other assets carries risk of loss.

#Fed #CryptoMarkets