Bloomberg Surveillance · Friday, July 17, 2026
Tiffany Wilding believes the Federal Reserve may resume reducing its balance sheet next year. This follows the halt of the quantitative tightening program late last year due to concerns about reserve scarcity. Wilding points to bank regulators like Michelle Bowman potentially relaxing liquidity regulations, which could lead banks to hold fewer reserves, enabling the Fed to further drain its balance sheet.
“Well, I mean, I think there's I think this is now an open question. So the FED stopped at so called QT program quantitative tightening, where it gradually reduces its balance sheet at the end of last year, you know, and as because we saw front end interest rates, overnight rates and things like that, you know, start to start to increase to suggest that you know, reserves were coming more scarce.”
“But ultimately we think they probably the Federals are probably can further reduce its balance sheet.”
“So we actually think that the Fed will probably start to reduce its balance sheet again next year as some of these policies. sort of reduce bank demand for real.”