Fed Pauses RMP, TD Analysts Say QT Not Imminent

TD Securities analysts Gennadiy Goldberg and Molly Brooks believe the Federal Reserve's decision to pause Reserve Management Purchases (RMP) after tapering from $40bn to $10bn per month is not a signal for imminent Quantitative Tightening (QT). They argue that the halt reflects soft money market rates and an ample reserve buffer, rather than a return to QT.

The analysts expect RMP to resume at a reduced pace in November 2026 before any balance sheet changes in 2027. The pause will likely last for several months until the Fed's built-up reserve buffer declines marginally, allowing money market rates to stabilize.

Goldberg and Brooks emphasize that the halt to RMP is temporary and not a permanent stop. They view it as an opportunity for the Fed to smooth over money market functioning ahead of year-end.