The Fed's Hidden Policy Easing Beyond Their 25 Basis Point Rate Cut
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Michael Gray2.67K FollowersFollow5ShareSavePlay(10min)CommentsSummaryThe Fed cut rates by 25 basis points to 3.50%-3.75%, marking its third consecutive cut and lowest level in three years.Beyond the rate cut, the Fed initiated Reserve Management Purchases (RMPs), buying $40 billion/month in T-bills to ease money market tightness.RMPs expand the balance sheet and inject liquidity, effectively absorbing 44% of new Treasury bill issuance and constituting monetary policy easing.Despite being presented as temporary, RMPs may persist and have inflationary implications, paralleling the Fed's prior QE experience. Douglas Rissing/iStock via Getty Images FOMC Cuts Rates By 25 Basis Points The headlines reporting the results of the Fed’s final FOMC meeting of 2025 all announced that the Fed cut interest rates. At the conclusion of the DecemberThis article was written byMichael Gray2.67K FollowersFollowMichael Gray has devoted his career to following the capital markets and managing fixed income assets. He founded Gray Capital Management LLC and before that was Head of Taxable Fixed Income at Fidelity Investments. Michael has an MBA in Finance from Wharton and a BA in Economics from Union College.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.