• Governor Stephen Miran publicly endorses the Fed's move to stop shrinking its balance sheet, effective December 1, 2025.
  • The decision responds to emerging stress in funding markets, including elevated repo rates and tighter bank reserves.
  • The central bank will now maintain its current bond holdings, reinvesting maturing securities to preserve market liquidity.

Federal Reserve Governor Stephen Miran has thrown his support behind the central bank's pivotal decision to end the runoff of its massive balance sheet, a move aimed at calming funding markets showing signs of strain. The Fed will halt its quantitative tightening program and hold its portfolio steady starting December 1, reinvesting the proceeds from maturing securities rather than allowing its holdings to shrink further.

Miran, who was appointed in September 2025 and has previously dissented in favor of more aggressive monetary easing, stated his alignment with the policy shift. The decision comes as the Fed confronts deteriorating conditions in money markets, including elevated repo rates and increased usage of its standing repo facility, which point to tighter bank reserves.

According to people familiar with the matter, internal analysis at the Fed indicated that continuing the balance sheet reduction risked amplifying volatility in short-term funding markets. The move to stabilize the balance sheet is also timed alongside concerns over disrupted fiscal flows, including the potential for government shutdowns and the economic distortions caused by recent tariff-related import surges.

"The data from funding markets was becoming difficult to ignore," said one market participant who requested anonymity to discuss central bank policy. "This is a pre-emptive strike to ensure liquidity remains ample."

The halt to runoff marks a significant shift in the Fed's post-2022 policy trajectory. The central bank had been steadily shrinking its portfolio of Treasury and mortgage-backed securities, a process that began after the asset purchases used to stabilize markets during the 2020 recession. This is not without precedent; a similar market stress episode in 2019 forced the Fed to pause its balance sheet reduction and intervene to support liquidity.

Miran's endorsement signals a degree of internal alignment after prior disagreements over the pace of monetary easing. The Fed has cut rates twice recently, bringing the target below 4%, but Miran had favored larger cuts to counteract what he viewed as weakening economic momentum and increased global uncertainty.

Efforts to reach a Fed spokesperson for additional comment on the timing of the balance sheet decision were unsuccessful.

The policy shift is largely welcomed by banks and financial institutions, which will benefit from greater liquidity and more predictable funding conditions. With the balance sheet now set to remain stable, market attention turns to the possibility of additional rate cuts at the December meeting, though Fed officials maintain that future decisions will remain data-dependent amid ongoing uncertainties.

An earlier version of this article misstated the month for the policy's effectiveness; it is December 1, 2025.