(MENAFN) US Federal Reserve Chair Jerome Powell suggested on Tuesday that the central bank is approaching the point where it will halt the shrinking of its bond portfolio.

However, he refrained from offering a long-term prediction on the future trajectory of interest rates.
Powell delivered an in-depth address concerning the Fed’s approach to "quantitative tightening," the process of decreasing the more than $6 trillion worth of securities held on its balance sheet.

This speech was given during the National Association for Business Economics conference held in Philadelphia.

Although he did not specify a precise timeline for concluding this program, Powell indicated that there are indicators showing the Fed is nearing its goal of maintaining "ample" reserves available for banking institutions.

“Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” Powell explained. “We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.”

The Federal Reserve aims for "abundant" reserves during periods of financial stress to ensure banks have access to liquidity and the economy remains stable.

To prevent excessive capital from circulating unnecessarily, the Fed targets "ample" reserves as the situation evolves, according to a news agency.

The central bank’s significant acquisitions of Treasury bonds and mortgage-backed securities during the COVID-19 pandemic caused its balance sheet to expand to nearly $9 trillion.

MENAFN15102025000045017167ID1110198867