TechFlow news, December 9 — According to foreign media analysis, the Federal Reserve officially ended its balance sheet runoff on December 1. As a result, bank reserves have declined to levels historically associated with funding stress, and the Secured Overnight Financing Rate (SOFR) has cyclically tested the upper bound of the policy rate corridor. These developments indicate that the U.S. banking system is gradually entering a state of liquidity strain. Against this backdrop, the most important signal from the FOMC may not be a 25-basis-point rate cut, but rather the direction of its balance sheet strategy. The Fed is expected to clearly outline, either explicitly or through its implementation notes, how it intends to transition into the Reserve Management Purchase program (RMP). Evercore ISI expects the program could begin as early as January 2026, allocating approximately $35 billion monthly toward Treasury bill purchases, resulting in annual balance sheet growth exceeding $400 billion. (Jinshi)
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