Fed Expected to Launch RMP as Early as January 2026

Summary

The Federal Reserve may initiate a Reserve Management Purchase (RMP) plan in January 2026, buying approximately $35 billion in Treasury bills monthly, potentially increasing the balance sheet by over $400 billion annually.JIN10+ 3

Impact Analysis

So, the Fed’s move to potentially start the Reserve Management Purchase plan in January 2026 is a big deal. They’re essentially trying to manage liquidity without the optics of traditional QE, which is quite telling. The timing is crucial—ending the balance sheet reduction just as reserves hit historic lows suggests they’re worried about liquidity tightness. The scale—$35 billion monthly—indicates a significant injection, but it’s being framed as a technical adjustment rather than a policy shift. This could stabilize repo markets and ease liquidity strains, but it also signals that the Fed is preparing for potential economic headwinds. For investors, this means looking at longer-duration Treasuries as yields might compress further. The market might be underestimating the dovish implications here, especially if Powell’s rhetoric remains hawkish. Watch for shifts in bond market sentiment and potential impacts on financial conditions. Bottom line—this is a stealthy liquidity boost, and positioning for lower yields could be advantageous.