Fed minutes show support for ending quantitative tightening

By Michael S. Derby

(Reuters) -The Federal Reserve’s decision last month ​to announce a looming halt to the drawdown ‌of its balance sheet earlier than many had expected drew broad support ‌from central bankers, who also expressed interest in reweighting central bank holdings from longer-dated bonds toward Treasury bills, meeting minutes from the late October policy ⁠meeting released on Wednesday ‌said.

“Many participants indicated that a greater share of Treasury bills could provide the ‍Federal Reserve with more flexibility” in dealing with market liquidity needs, the minutes for the October 28-29 Federal ​Open Market Committee meeting showed.

The document added that “‌several participants also noted that a greater share of Treasury bills could increase flexibility for future monetary policy accommodation without having to raise the level of reserves.”

At the October policy meeting, the Fed said it ⁠would end the process known ​as quantitative tightening, or QT,​ on Dec. 1. It did so to ensure there was enough liquidity in ‍the financial ⁠system to retain firm control over the federal funds rate, its primary tool to achieve its ⁠monetary policy goals, and to allow for normal money market ‌volatility.

(Reporting by Michael S. Derby; ‌Editing by Chizu Nomiyama )