December 1 end of quantitative tightening gives markets some time to adapt, says Fed Chair Powell

Core Viewpoint - The discussions regarding economic assessments and monetary policy decisions are ongoing, with no predetermined conclusions for the upcoming December meeting, highlighting diverse opinions among participants [4]. Economic Assessment - Current economic assessments indicate that inflation risks are skewed to the upside, while employment risks are to the downside, suggesting a complex economic landscape that cannot be addressed simultaneously with existing tools [2]. - Different forecasts exist among participants, reflecting varying levels of risk aversion towards inflation and employment outcomes [3]. Monetary Policy and Balance Sheet Management - The committee has indicated a gradual tightening in money market conditions, with significant tightening observed in recent weeks [8]. - The balance sheet is currently shrinking at a slow pace, with a decision to freeze its size effective December 1, allowing markets time to adapt [9]. - The reduction of reserves will continue as non-reserve liabilities grow, indicating a strategic approach to balance sheet management [7].