At the April FOMC meeting the committee decided not to cut interest rates, leaving the federal funds effective rate at 3.50%-3.75%. The level of bank reserves and the Federal Reserve’s balance sheet has risen since the end of 2025, but recently pulled back, signifying tightening of liquidity in the banking system and a scarcity of cash. Kevin Warsh, the new Fed Chair, desire to shrink the Federal Reserves balance sheet will no doubt be tested, as current financial conditions

At the March FOMC meeting the Fed once again decided not to cut interest rates. Since the December meeting when the Fed decided to restart asset purchases (QE) on a small scale, liquidity has improved, but as previously hypothesized, these actions have not prevented employment growth from declining or helped the hiring rate to rise. Reserve Balances The Fed cited risks from the labor market, inflation expectations, and the war with Iran as reasons not to cut. As commodity pri

Since the December FOMC meeting, when the Fed decided to once again embark on small asset purchases, otherwise known as QE, liquidity has improved. Mostly through the level of reserves in the banking system being boosted by the asset purchases. As previously mentioned, these actions will not prevent employment growth from declining. As the market is forward looking, gold and silver prices have soared in response to this policy change from the Fed. Consequently, at the January

In our previous market update we discussed the need for the Fed to restart quantitative easing, and at the December FOMC meeting they did just that. Although the asset purchases are small, this change in monetary policy will boost the total monetary base, reserves, and liquidity, but it will not prevent employment growth from declining, which may force the small asset purchases (QE), to become larger as employment weakens. Investors should keep in mind that QE began in 2008,