Fed likely to resume balance sheet expansion before year-end, projects former trader

The Federal Reserve will likely resume balance sheet expansion before year-end after three years of reduction, according to Joseph Wang, a former New York Fed open market desk trader now active on YouTube as The Fed Guy. Wang said the move aims to maintain control over short-term interest rates rather than prevent risk asset collapses or liquidity crises. He projects the Fed will need to expand its balance sheet by $300B to $500B annually, driven by strong repo demand and the growing Treasury General Account.