Currently, the Fed is using two

Currently, the Fed is using two cards at the same time, QT (currency contraction through OMO transactions) and base rate cuts (currency expansion through credit generation).

The 👉 QT is quite direct,
👉 Adjustment of the benchmark interest rate takes about 14-20 months to take effect.

This appears to be an attempt to mitigate potential recession risks while curbing inflation (= catch two rabbits).

It also deals well with the psychology of ant investors and institutional investors/traders through communication with the public, such as suddenly making hawkish remarks like last time.
👉 It is not a crash, but a healthy market correction, allowing it to wipe out the long-term growth plate.

*Also Read: This attempt to promote price stability by verbally adjusting expectations for the Fed’s future moves is called jawboning in jargon.

J Powell often says, “I’m walking a very difficult narrow path / I’m walking a tightrope.” I don’t know what the public thinks, but I think he’s doing the best job so far among the Fed chairmen. One of the Fed Williams comments on the Fed’s balance sheet

1. No Prediction When Balance Sheet Contraction Will Stop.
   The timing of QT interruption is not expected.
2. Financial Sector Reserves Still Look Abundant.
   The financial sector’s reserves are still overflowing.
   ->There are three expressions for excessive and insufficient reserves.
   Scarce, Ample, Abundant
   Shortage, Enough, Overrun (Nöffical Interpretation)
3. Fed Has No Current Plans For Asset Sales.
   The Fed has no intention of selling its holdings at this time.
   -> The Fed’s QT is not an active QT to sell your holdings, but a passive QT to settle maturities when they come to maturity. It means you won’t be actively selling MBS, government bonds right now.