How The Fed Has Been Quietly Tightening Ahead Of The Expected Rate Hike

Summary The Fed has extended its halt of Reserve Management Purchases (RMPs), signaling a pause in recent balance sheet-driven policy easing. RMPs were initially implemented to address liquidity tightness after reserves fell below the $2.9 trillion 'ample' threshold, reversing post-QT tightening. With RMPs halted, the Fed's SOMA portfolio has stopped growing, marking a shift back to policy tightening via balance sheet management. Market expectations are for a 25 basis point rate hike, as inflation remains elevated and yields have spiked since Warsh became Fed Chair. sommart/iStock via Getty Images Fed Extends Halt Of Reserve Management Purchases Yesterday the New York Fed revealed that they were extending their halt on Reserve Management Purchases for the second consecutive month. There was no formal announcement, just one line This article was written by Michael Gray 2.95K Followers Follow Michael Gray has devoted his career to following the capital markets and managing fixed income assets. He founded Gray Capital Management LLC and before that was Head of Taxable Fixed Income at Fidelity Investments. Michael has an MBA in Finance from Wharton and a BA in Economics from Union College. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.