Fed's Treasury bill purchases continue at roughly $26 billion a month as balance sheet expands

The @NewYorkFed trading desk is scheduled to purchase approximately $17 billion in Treasury bills over the next three weeks, part of an ongoing reserve management program (RMP) that has run since December 2025. Combined with the reinvestment of proceeds from maturing mortgage-backed securities, the program totals roughly $26.5 billion per month in new Treasury bill demand.

How the program started

In December 2025, the Federal Open Market Committee determined that reserves had declined to ample levels and instructed the New York Fed's Open Market Trading Desk to begin reserve management purchases to maintain reserves within an ample range. The Fed had abruptly stopped shrinking its balance sheet, a process known as quantitative tightening, at the end of 2025 and pivoted to adding reserves back into the financial system by buying short-term Treasuries due in less than a year.

The desk launched with approximately $40 billion in Treasury bill purchases in December, anticipating that the elevated pace would be needed for a few months to offset expected large increases in non-reserve liabilities heading into April. The central bank then sharply reduced reserve management purchases to $25 billion in April, a steeper reduction than many had anticipated. By July, the Fed settled on around $10 billion per month in reserve management purchases, unchanged across several consecutive cycles, as policymakers sought to bolster reserves ahead of an anticipated seasonal drain.

Not QE, but the debate continues

The FOMC has been clear that the monthly purchase amount consists of reserve management purchases to grow the SOMA portfolio and maintain ample reserve conditions, sized to accommodate seasonal fluctuations in demand for Federal Reserve liabilities as well as longer-term trend growth in that demand. The Fed explicitly rejects comparisons to quantitative easing, framing the operations as routine plumbing rather than stimulus.

Some market observers are less convinced. U.S. Treasury debt has reached approximately $39 trillion as of early July 2026, with Treasury bills alone accounting for roughly $6.7 trillion that must roll within twelve months. The Fed, as a regular purchaser of T-bills, is absorbing roughly $540 billion in 2026 paper that would otherwise need to clear on price. Critics argue that scale makes the program difficult to distinguish from earlier liquidity cycles in practice, whatever its technical label.

The FOMC's June 2026 implementation directive reaffirmed the T-bill purchase program with no sunset language, and monthly purchase amounts are announced on a rolling basis with no multi-month commitment locked in, meaning the program persists indefinitely absent a formal FOMC decision to end it.

Sources:
New York Fed: Reserve Management Purchases and Reinvestment Purchases FAQ
New York Fed Teller Window: The Implementation of Reserve Management Purchases
Brookings Institution: How will the Federal Reserve decide when to end quantitative tightening?