Fed Seen Cutting Rates, Weighing Early QT End

With a rate cut expected Wednesday, attention is shifting to whether the Federal Reserve will halt quantitative tightening amid mounting funding strains. Repo rates have brushed the Fed’s ceiling, driving reluctant use of its Standing Repo Facility and sparking debate over reserves. Wrightson ICAP expects runoffs to end now; Barclays says December, while warning an early stop could deepen SRF stigma. JP Morgan argues for ending QT as bill issuance—about $600 billion so far, with $200 billion more expected—pulls cash from repo. SOFR hovered within 5 bps of the SRF’s 4.25% rate, and bank reserves fell below $3 trillion.

Reviewed by JQJO team

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