What the Fed Says vs. What the Balance Sheet Does

Let’s talk about the Federal Reserve’s balance sheet and how it interacts with its public statements. As of mid-May 2026, the Fed's balance sheet stood at a whopping $6.729 trillion. Now, that number alone can sound a bit overwhelming, so let’s break it down. This enormous total includes about $4.45 trillion in U.S. Treasury securities, nearly $2 trillion in mortgage-backed securities, and another $297 billion in various other securities.
What’s interesting is how the balance sheet has changed recently. In the past year, the Fed has increased its Treasury holdings by $234 billion, while at the same time, mortgage-backed securities have dropped by $192 billion. This shift indicates a gradual normalization process through asset runoff. But what does this mean in terms of the Fed’s policy stance?


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