Fed Cuts Rates and Ends Quantitative Tightening
The Fed lowered its key interest rate by a quarter point on Wednesday, bringing it to a range of 3.75% to 4.00%. This second consecutive cut aims to support a labor market showing signs of slowing, with unemployment at 4.3% in August—the highest level since 2021. At the same time, the Fed announced the end of its quantitative tightening (QT) program, which began in 2022 to reduce its balance sheet after the extraordinary measures taken during the pandemic. The balance sheet, which once reached nearly $9 trillion, now stands at around $6 trillion—a level deemed sufficient to maintain financial stability without stifling growth.
Markets are anticipating two more rate cuts by the end of the year, but Jerome Powell remains cautious, emphasizing that there is no risk-free path for monetary policy. The end of QT was expected by economists, who feared liquidity strains in the markets. The Fed stands ready to intervene if needed to ensure a smooth transition.
In summary: The Fed is easing monetary policy to prevent an overly sharp economic slowdown while closely monitoring liquidity conditions. Good news for the markets, but uncertainty remains about the extent of future rate cuts. Stay tuned!
$USDOLLAR$SPX500$IEF (iShares 7-10 Year Treasury Bond ETF) $VIX.NOV25 $NSDQ100... Show More
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Sun Dec 07 2025 01:33:48 GMT+0000 (Coordinated Universal Time)
