Macro glossary
Quantitative Tightening (QT)
Reduction of the Fed's balance sheet by allowing Treasuries and agency MBS to run off without reinvestment.
Definition
QT drains reserves from the banking system and tightens financial conditions beyond what Fed Funds alone would imply. The 2022-24 QT cycle reduced the Fed balance sheet by over $1.5 trillion.
Related indicators
Related terms
M2 Money Supply
A broad measure of US money supply including currency, checking deposits, savings deposits, and money-market accounts.
Overnight Reverse Repo (ON RRP)
The Fed facility that lets eligible counterparties lend cash overnight to the Fed in exchange for Treasury collateral.
Federal Funds Rate
The overnight interbank lending rate targeted by the Federal Open Market Committee.