Federal Reserve Pauses Tightening as Emergency Lending Hits $300 Billion

The Federal Reserve balance sheet has surged to its highest level since November as the central bank attempts to avert the contagion of the banking crisis.
The Fed’s balance sheet for the week ending March 15 increased by $297 billion, hitting a five-month high of $8.639 trillion.
Since climbing to an April peak of $8.965 trillion, the U.S. central bank has gradually reduced its balance sheet over the past 10 months by redeeming $95 billion worth of securities each month.
During the COVID-19 pandemic, the Fed had accumulated approximately $4.6 trillion worth of Treasurys, mortgage-backed securities, and corporate bonds, dramatically bolstering its bond portfolio to nearly $9 trillion. However, its latest tightening endeavor has diminished its role as a liquidity provider for the financial system, especially as money-supply growth contracted in January (negative 1.05 percent) and February (negative 1.73 percent)….}