Federal Reserve to Reduce Pace of Balance Sheet Reduction Starting June

The Fed will lower its monthly Treasury runoff cap to $25 billion, maintaining the current pace for mortgage-backed securities.

The Federal Reserve announced a slowdown in its balance sheet reduction, set to begin on June 1, reducing the Treasury securities runoff cap from $60 billion to $25 billion monthly.
Interest rates remain unchanged, with the federal funds rate target held steady at between 5.25% and 5.5%.
The slowdown in balance sheet reduction aims to mitigate market disruptions and ensure a smooth transition in financial markets.
Despite the reduction, the Fed's balance sheet has contracted significantly, from a peak of $9 trillion to around $7 trillion.
Federal Reserve Chair Jerome Powell emphasized that this adjustment does not signal a lesser overall reduction but allows a more gradual approach to achieving the desired balance sheet size.