- Dr. Profit explains that ending Quantitative Tightening does not signal new money creation, as the Federal Reserve continues reducing market liquidity.
- The $50 billion Standing Repo Facility usage was a temporary liquidity measure, showing tightening funding conditions rather than quantitative easing or expansion.
- Rising SRF demand and a drained reverse repo pool reveal late-stage QT stress, suggesting that tightening liquidity across financial markets continues to intensify.
QT Ending Is Not QE Yet—Market analyst Dr. Profit addressed widespread confusion surrounding the Federal Reserve’s recent monetary decisions, offering a detailed explanation of why ending Quantitative Tightening does not signal the beginning of Quantitative Easing or new liquidity injection.
QT Ending Is Not QE Yet—Analyst Clarifies Market Confusion
Dr. Profit, a seasoned market observer, emphasized that many traders are misinterpreting the Federal Reserve’s announcement regarding QT. He stated that what Jerome Powell said did not unveil a new liquidity program but rather stated that QT will officially end on December 1, 2025.
He added that Quantitative Tightening is when the Fed decreases liquidity by letting bond holdings mature without reinvesting. This approach helps the central bank withdraw money from the system to ease inflationary pressure. In contrast, Quantitative Easing is the opposite stage, when the Fed expands its balance sheet and injects fresh funds into the market.
The analyst warned that assuming QT’s end equates to QE’s start is inaccurate. Historically, the Federal Reserve only transitions to QE after a liquidity crisis, such as during the 2008 financial collapse, the 2019 repo crisis, or the 2020 pandemic shock. Until December 2025, the Fed continues to tighten, not ease, market liquidity.
Liquidity Misread—The $50 Billion “Printing” Myth
Dr. Profit also corrected another misunderstanding—claims that the Fed “printed” $50 billion last week. He clarified that the amount represented temporary liquidity through the Standing Repo Facility (SRF), not permanent cash creation or balance sheet expansion.
The SRF allows banks to borrow funds overnight, backed by Treasury securities, and return them the next day with a small interest payment. Such operations are designed to stabilize short-term funding and do not increase the overall money supply. Hence, there was no actual “money printing.”
He added that the surge to $50 billion in SRF usage was a sign of tightening liquidity rather than expansion. Private repo markets have been drying up, forcing banks to depend on the Fed’s backstop. As reverse repurchase agreements (repo) of the Federal Reserve fall from $2.2 trillion to around $14 billion, liquidity in the banking system has tightened considerably, and as a result, many institutions have been forced to seek emergency short-term funding.
Late-Stage QT Stress and Potential Policy Shifts
According to Dr. Profit, current liquidity conditions indicate the market is entering the late phase of Quantitative Tightening. The surge in SRF borrowing and depletion of reverse repo funds are signs of growing pressure within the financial system.
He said a similar experience happened during the QT episode in 2017–2019 that led to the 2019 repo crisis, which was followed by significant QE during the COVID collapse in 2020. He signified that the six-month separation between QT and QE was a ‘one-off historical anomaly’ and not something that can be repeated.
Dr. Profit concluded that the system is once again approaching a critical stage. Liquidity is fading, borrowing costs are climbing, and the repo market is tightening further. While QT Ending Is Not QE Yet, he noted that prolonged stress in funding markets could eventually force the Federal Reserve to shift direction once more to restore stability.
