Powell hinted that QT may end within months and warned that revoking IOR could cause market turmoil

According to the WSJ, Federal Reserve Chairman Jerome Powell indicated in a speech that the balance sheet reduction plan may end in the coming months due to the recent strengthening of several overnight funding rates, prompting the Fed to reassess its progress on the QT. Powell also warned that if Congress abolished the interest on reserves (IOR) payment mechanism, the Fed could lose effective control over short-term interest rates, forcing it to sell off Treasury bonds or mortgage-backed securities (MBS) on a large scale in a short period of time, posing a threat to market stability.