At the January meeting, Federal Reserve officials expressed concerns about managing the ongoing drawdown of their balance sheet. They noted that a pause or slowdown might be appropriate until clarity on the U.S. Treasury’s debt issuance becomes available.

The Federal Reserve has reduced its balance sheet by over $2 trillion since its peak, yet officials are wary of overshooting their quantitative tightening efforts. Adequate market liquidity readings are crucial to deciding the continuation of this process.