Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
How The Fed’s Balance Sheet Shrinks Inflation
In this episode of The Fiscal Policy Podcast, Lucas and Luna explore the mechanics of quantitative tightening. With the Federal Reserve actively reducing its holdings of Treasury bonds and mortgage-backed securities through September 2026, we break down how shrinking the central bank’s balance sheet impacts interest rates and household borrowing costs. We look at specific caps on monthly runoff, the difference between passive maturity and active selling, and why this quiet process matters more than any public statement from the FOMC.
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The skinny
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