by Mike Maharrey
GoldSeek
Last month, the Federal Reserve paused interest rate cuts due to sticky price inflation. This indicates tighter monetary policy moving forward. However, market observers tend to ignore the second prong of monetary policy — the balance sheet.
Most people believe the Fed bowed out of the inflation fight and began easing monetary policy in September when it delivered its super-sized rate cut. In fact, the Fed began easing months earlier when it tapered balance sheet reduction, or quantitative tightening (QT), in June 2024.
Now it appears that even with hawkish talk about keeping monetary policy tighter for longer and slowing the pace of interest rate cuts, the central bank may be set to ease monetary policy even further despite inflation by further slowing or even ending balance sheet reduction.