The Fed stopping the balance sheet reduction does not mean that the balance sheet will immediately rebound? It may have to wait until early 2026.

OnChainDetective

2025-12-01 04:20:19

[Block Rhythm] An analyst has raised a rather interesting point - don't expect the Fed's balance sheet to recover anytime soon.

Looking back at that round of operations in 2019: The Fed announced on August 1st that it would stop the balance sheet reduction, but the actual data showed that the balance sheet continued to decline throughout August. The reason is simple; the last batch of maturing treasury bonds would not be settled until mid-August, and there is always a lag between policy and data.

In contrast to the current round of balance sheet reduction, although December 1st nominally marked an end, this does not mean that the balance sheet can immediately turn upwards. Based on the last experience, it may take until early 2026 to truly see a shift at the data level.

This time difference is quite crucial for managing liquidity expectations, as many people are watching the changes in the Fed's balance sheet to assess the market environment.

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GoldDiggerDuck

· 7h ago

It's the old trick of "policy announcement ≠ actual implementation" again... Will we only see the real outcome in early 2026? So how should we speculate in these next two years?

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SybilAttackVictim

· 17h ago

Are you trying to trick me to get on board again? It won't take effect until early 2026, and I'm afraid I can't wait that long.

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TrustlessMaximalist

· 18h ago

Here comes the old trick of "data lag" again. Anyway, we won't see the real results until 2026. Who knows how many more times we will have to go through this in the meantime.

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DataBartender

· 18h ago

Another trap again? Policies are announced and data is implemented always two months apart, the same old story.

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GasFeeSobber

· 18h ago

Another year to wait? The delay between policy announcements and data responses is really absurd.

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