Reuters
The Federal Reserve's effort to contract its balance sheet will likely run into 2025 before the process ends, depending on the financial system's need for bank reserves, the Federal Reserve Bank of New York said in a report released on Wednesday. "Future financial and economic conditions and their impact on the demand for reserves and the balance sheet are highly uncertain," the bank said in its annual report for the central bank's System Open Market Account, which holds the Fed's cash and bonds primarily to conduct monetary policy. The Fed is shrinking its bond holdings in a process called quantitative tightening, or QT, to reverse part of its massive asset buying begun at the onset of the coronavirus pandemic in the spring of 2020.