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Box B: The United States is Headed for Financial Stress

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  • Paul Mortimer-Lee

Abstract

The March Federal Open Market Committee (FOMC) meeting showed concern about financial market stress. In view of what happened in April, that was prescient. At this meeting, the Fed decided to slow down shrinking its balance sheet, from $25 billion a month in Treasuries to only $5 billion, with Fed Chair Powell linking this to signs of tightness in money markets. This is a distinct change of tune because in February, he told Congress that the shrinkage in the Fed's balance sheet had shown no signs of adversely affecting money market liquidity, concluding that 'I think we have ways to go' with reducing the balance sheet.

Suggested Citation

  • Paul Mortimer-Lee, 2025. "Box B: The United States is Headed for Financial Stress," National Institute Global Economic Outlook, National Institute of Economic and Social Research, issue 18, pages 28-31.
    • Handle: RePEc:nsr:niesrb:i:18:y:2025:28-31
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