A Delicate Balance: The US Federal Reserve's Quantitative Tightening
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A Delicate Balance: The US Federal Reserve's Quantitative Tightening

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CEO Insight Minute: Does Quantitative Tightening Pose Risks to Your Company?

The Fed has been steadily reducing the size of its balance sheet: too large a balance distorts asset prices, while one that’s too small poses liquidity risks.

Since its balance sheet reached a record $9 trillion in 2022, the Federal Reserve (Fed) has been steadily reducing the size of it—a process known as quantitative tightening (QT). The Fed’s assets have so far declined without a hitch, falling from $9 trillion to $7.5 trillion over the past two years and operating smoothly in the background.

Since its balance sheet reached a record $9 trillion in 2022, the Federal Reserve (Fed) has been steadily reducing the size of it—a process known as quantitative tightening (QT). The Fed’s assets have so far declined without a hitch, falling from $9 trillion to $7.5 trillion over the past two years and operating smoothly in the background.

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