The Fed Doubles Down on Easy Money: Rate Cuts Deepen as QT Comes to a Halt

To the relief of many market-movers, last week the FOMC voted to cut rates for the second time this year and announced that the Fed will begin maintaining its balance sheet starting in December. With this return to easy-money, Powell and the Fed are again attempting to paper over economic fault-lines created by their own past policies.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

The Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday voted to again reduce the target policy interest rate by 25 basis points, down to an upper bound of 4.0 percent. The FOMC has now cut the policy rate (i.e., the federal funds rate) five times since September 2024, totaling a reduction in 150 basis points over 13 months. 

Fed Chairman Jerome Powell also announced on Wednesday that the Fed plans to end quantitative easing as of December 1. That is, the Fed will cease allowing reductions in its balance sheet and will switch to maintaining its balance sheet at current levels. Moreover, the Fed will reconfigure its balance sheet to increase its focus on Treasurys and reduce its holdings of mortgage-backed securities.