Fed expected to end balance sheet tightening as focus turns to liquidity tools

Federal Reserve Chair Jerome Powell is expected to signal the conclusion of quantitative tightening in November, shifting attention to long-term liquidity operations. Analysts said the move follows stable inflation and a mild cooling in labor data, allowing the Fed to stabilize reserves while maintaining policy flexibility. The change would mark a significant pivot from balance sheet contraction toward sustained neutrality. Investors anticipate a clearer framework on runoff pacing and collateral facility usage to ensure market stability through 2026.