Federal Reserve Ends Quantitative Tightening Program

The U.S. Federal Reserve officially concluded its multi-year quantitative tightening (QT) program on December 1, 2025, halting the automatic runoff of securities from its balance sheet. This marks the end of a $2.4 trillion reduction that began in June 2022, leaving the Fed’s holdings stable at approximately $6.5 trillion. The decision aims to normalize monetary policy as inflation trends toward the 2% target, while maintaining ample liquidity in the financial system.

What Quantitative Tightening Was and Why It Ended

Quantitative tightening involved allowing up to $60 billion in Treasury securities and $35 billion in mortgage-backed securities to mature each month without reinvestment, shrinking the Fed’s balance sheet from pandemic-era highs. The program slowed in June 2024 to $25 billion monthly before stopping entirely on December 1. Fed Chair Jerome Powell explained the move in the November FOMC statement, noting that reserve levels remain “ample” and the balance sheet size is now consistent with effective interest rate control.

The halt prevents potential strains in money markets, where short-term funding rates had begun to rise above the Fed’s target range. Officials emphasized that the action supports stability without resuming asset purchases, aligning with the Fed’s data-dependent approach to policy.

Powell’s Remarks: Economic Conditions and Policy Framework

On the same day, Powell delivered prepared remarks at 4 p.m. ET, addressing current economic indicators, the monetary policy outlook, and the Fed’s framework ahead of the December 9–10 FOMC meeting. He highlighted balanced risks to employment and inflation, with recent data showing 119,000 September payrolls and 4.4% unemployment. Powell reiterated the Fed’s commitment to 2% inflation while noting flexibility for future adjustments based on incoming information.

Markets anticipate a 25 basis point rate cut to 3.50%–3.75% at the December meeting, with an 82.7% probability per CME FedWatch Tool.

Liquidity Injection: $13.5 Billion Repo Operation

Coinciding with the QT end, the New York Fed conducted a $13.5 billion overnight repurchase agreement (repo) operation—the second-largest since the COVID-19 crisis. This injected short-term liquidity to ease money market strains, where the Secured Overnight Financing Rate (SOFR) had spiked to 4.25%. The operation, surpassing Dot-Com bubble peaks, underscores the Fed’s proactive stance on funding stability.

Implications for Markets and Crypto

The QT conclusion removes a key liquidity drain, potentially supporting risk assets by freeing up reserves estimated at $3 trillion. Bitcoin traded at $90,355 (+3.83% daily) following the news, with Ethereum at $3,019 (+3.21%) and Solana at $142.53 (+4.25%). Total crypto market cap rose 3.6% to $3.2 trillion, reflecting optimism for easier conditions.

Analysts like those at Wintermute view the shift as a tailwind, though Powell’s data-dependent tone tempers expectations for aggressive easing. Bank reserves, now 10% of U.S. GDP, provide a buffer against tightening, but ongoing monitoring will be key.

In summary, the Federal Reserve’s December 1, 2025, QT end stabilizes the $6.5 trillion balance sheet after $2.4 trillion runoff, paired with Powell’s remarks on policy and a $13.5 billion repo injection for liquidity—boosting rate cut odds to 82.7% and supporting risk assets like Bitcoin’s 3.83% gain to $90,355.