Lookonchain APP

App Store

Federal Reserve Monetary Policy Report: Plan to Stop Balance Sheet Reduction at Appropriate Time

2025.02.08 00:40:24

February 8th. The Federal Reserve issued its semiannual monetary policy report. It was mentioned in the report that the Fed is continuously and significantly reducing its holdings of U.S. Treasury securities and agency securities in a predictable manner. Since June 2024, the Fed has decreased its holdings of securities by $297 billion, and the total holdings of securities have declined by approximately $2 trillion since the start of the balance sheet reduction. The Federal Open Market Committee (FOMC) expressed its intention to maintain the level of securities holdings at a level that is consistent with the efficient implementation of monetary policy under the ample-reserve regime. In order to ensure a smooth transition, the FOMC slowed down the pace of securities holdings reduction in June 2024 and intends to stop reducing holdings when the reserve balance is slightly above the level that it deems to be consistent with ample reserves. Driven by a strong labor market and rising real wages, consumer spending has been continuously growing vigorously. Meanwhile, real business fixed investment has increased moderately. In the housing market, new home construction has been strong, but existing home sales remain sluggish as mortgage rates remain high. Unlike the GDP situation, manufacturing output has remained relatively stable. This is partly due to the softness in production in interest rate-sensitive industries. The U.S. financial system remains sound and resilient. Valuations in various markets, such as stocks, corporate debt, and residential real estate, are still relatively high compared to fundamentals. The ratio of total household and nonfinancial business debt to Gross Domestic Product (GDP) continues to decline and is currently at historically low levels compared to the past two decades. The capital levels reported by most banks are still well above regulatory requirements. Although the reliance on uninsured deposits has decreased, some banks still face significant fair value losses on fixed-rate assets. Regarding funding risks, although the 2023-2024 Securities and Exchange Commission reforms to money market funds (MMFs) have partially alleviated the vulnerability of major MMFs, other lightly regulated short-term investment instruments still remain susceptible to shocks and lack transparency. At the same time, the asset size of these instruments continues to grow. Meanwhile, hedge funds seem to have high and concentrated leverage ratios. (Jinse)
Relevant content

Raster Chart Analysis: One Fed Member Supports 3 Rate Hikes This Year

June 18 – The Federal Reserve’s June dot plot (a key part of its Summary of Economic Projections, or SEP) shows notable shifts in policymakers’ 2026 interest rate outlooks compared to March’s projections, according to data analyzed by FXStreet. Breakdown of Fed participants’ 2026 rate expectations: - 1 participant sees 3 rate hikes (no such projection in March) - 5 participants project 2 rate hikes (0 in March) - 3 participants anticipate 1 rate hike (0 in March) - 8 participants expect rates to hold steady (7 in March) - 1 participant forecasts 1 rate cut (7 in March) - 0 participants call for 2, 3, or 4 rate cuts (vs. 2, 2, and 1 participants respectively in March) Overall, the number of policymakers supporting rate hikes in 2026 has surged to 9, with one official backing an aggressive 75 basis point (bps) hike. Conversely, support for rate cuts has plummeted sharply to just one participant.

1 seconds ago

After the Fed released its interest rate decision, Bitcoin experienced a brief drop of over 1%, while the DXY dollar index saw a quick 35-point surge.

On June 18th, the Federal Reserve kept its benchmark interest rate unchanged at 3.50%-3.75%, maintaining the status quo for the fourth consecutive meeting—this move was fully in line with market expectations. Following the Fed’s interest rate announcement, HTX market data shows Bitcoin dipped briefly by more than 1% and is currently trading at $65,417. Per Bitget data, spot gold saw a short-term decline of over $40, while the U.S. Dollar Index (DXY) rose 35 points in the same period.

1 seconds ago

Federal Reserve Dot Plot: 9 Officials See Rate Hike in 2026

On June 18, the Federal Reserve’s dot plot—with 18 of its 19 officials submitting forecasts this cycle—revealed projections for cumulative interest rate adjustments in the remainder of 2026: one official sees a 75 basis points (bps) cumulative hike, five expect a 50 bps increase, three forecast a 25 bps hike, eight call for rates to stay unchanged, and one predicts a 25 bps cumulative rate cut. (Source: FXStreet)

1 seconds ago

The market is now fully expecting the Federal Reserve to raise interest rates by 25 basis points before the end of the year.

June 18 — Markets are now fully pricing in a 25 basis point interest rate hike from the Federal Reserve by year-end. (Kryptonite)

1 seconds ago

Fed's Microphone: Fed Significantly Hawkish, Policy Statement Overhauled

June 18 — Nick Timiraos, widely known as the “Fed’s Whisperer,” analyzed the Federal Reserve’s latest interest rate decision, pointing out the central bank’s dot plot shows a clear hawkish tilt. Among 18 Fed officials, 9 expect at least one interest rate hike this year, with 6 forecasting multiple increases. By contrast, only one official projects a rate cut this year; additionally, one participant (presumed to be Fed Chair Powell) did not submit their Summary of Economic Projections (SEP). The Fed’s policy statement also underwent a full, comprehensive revision from start to finish, with its text length significantly shortened. Overall, the communication framework for this meeting has undergone a major shift, which may lead to a readjustment in market expectations for the future interest rate path. Source: Kinetic Mind.

1 seconds ago

The Federal Reserve Keeps Interest Rates Unchanged as Scheduled

June 18: The Federal Reserve kept its benchmark interest rate steady at 3.50% to 3.75%, marking the fourth consecutive pause in rate hikes — a decision that fully aligned with market expectations. After the Fed released its interest rate announcement, data from Bitget shows spot gold plummeted more than $40 in a short window, while the U.S. Dollar Index (DXY) surged 35 points rapidly.

1 seconds ago