Key Takeaways
- •Powell hints at ending quantitative tightening to support employment stability.
- •Federal balance sheet could stabilize in coming months.
- •Market liquidity is a key concern amid these monetary policy shifts.
Federal Reserve Chair Jerome Powell has indicated the potential end of balance sheet reduction, citing increased downside risks to employment. Powell highlighted that ample banking reserves might lead to halting the quantitative tightening in upcoming months.
Federal Reserve Chair Jerome Powell, during a speech in Philadelphia on October 14, 2025, signaled that the central bank might soon end its balance sheet reduction due to rising risks to employment.
This potential shift in Fed policy could impact financial markets, particularly in the cryptocurrency sector, where volatility often follows changes in liquidity conditions.
Jerome Powell, leading the Federal Reserve since 2018, emphasized in Philadelphia that economic stability and employment concerns are central to ceasing the balance sheet reduction. The Fed's quantitative tightening has seen a reduction of $2.2 trillion.
“We may approach that point in coming months and we are closely monitoring a wide range of indicators to inform this decision,” said Jerome Powell, Chair of the Federal Reserve.
Market response to this announcement could affect several sectors. A halt in QT might boost liquidity in the economy, affecting US Treasuries, mortgage‑backed securities, and digital asset markets, notably Bitcoin and Ethereum.
Crypto financial markets could experience heightened volatility. Historically, Federal Reserve policy shifts influence on‑chain data and DeFi activities, with stablecoins responding to these macro‑level changes.
The end to QT corresponds with efforts to sustain financial market stability and prevent employment downturns, reflecting past concerns like those seen in the September 2019 money market strains. This decision aligns with the historical precedence of managing liquidity for stability.
Insights from this policy suggestion indicate a potential upward trend in digital assets, reflective of increased market liquidity and investor confidence. Financial analysts may anticipate changes in DeFi TVL and stablecoin issuance, aligning with past cycle behaviors.