The Federal Reserve announced it will end its program of Quantitative Tightening (QT)—the process of reducing its securities holdings—on December 1, 2025, marking a significant shift in U.S. monetary policy.
The decision was made during the Federal Open Market Committee (FOMC) meeting on October 29, 2025, where policymakers also voted to cut the federal funds rate by 25 basis points.
Under the plan, the Fed will transition to a neutral balance sheet policy after December 1. It will reinvest all principal payments from maturing Treasury and agency mortgage-backed securities (MBS) instead of allowing them to roll off. Proceeds from maturing MBS will be redirected into short-term Treasury bills, advancing the Fed’s long-term goal of holding primarily Treasury assets on its balance sheet.
The move follows more than three years of balance sheet reduction, during which the Fed’s total assets declined by about $2.2 trillion from their peak. The shift signals a turn toward a more accommodative policy stance amid signs of a cooling labor market and tightening liquidity conditions in money markets.
By ending QT, the Fed is effectively pausing the contraction of its balance sheet and moving toward an ample-reserve system, aiming to maintain stability in short-term funding markets while supporting broader economic growth.
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