[Federal Reserve Monetary Policy Report: Plan To Stop Balance Sheet Reduction At Appropriate Time] February 8Th. The Federal Reserve Released Its Semiannual Monetary Policy Report, In Which It Mentioned That The Fed Continues To Significantly Reduce Its Holdings Of U.S. Treasury Securities And Agency Securities In A Predictable Manner. Since June 2024, The Fed Has Reduced Its Holdings Of Securities By $297 Billion, And The Total Holdings Of Securities Have Decreased By About $2 Trillion Since The Balance Sheet Reduction Began. The Federal Open Market Committee (FOMC) Stated Its Intention To Maintain The Level Of Securities Holdings At A Level Consistent With The Efficient Implementation Of Monetary Policy Under The Ample-Reserve Regime. To Ensure A Smooth Transition, The FOMC Slowed The Pace Of Securities Holdings Reduction In June 2024 And Intends To Stop Reducing Holdings When The Reserve Balance Is Slightly Above Its Perceived Level Consistent With Ample Reserves.Supported By A Strong Labor Market And Rising Real Wages, Consumer Spending Has Continued To Grow Robustly, While Real Business Fixed Investment Has Increased Moderately. In The Housing Market, New Home Construction Has Been Robust, But Existing Home Sales Remain Subdued As Mortgage Rates Remain Elevated. Unlike The GDP Situation, Manufacturing Output Has Remained Relatively Unchanged, In Part Due To Softness In Production In Interest Rate-Sensitive Industries.The U.S. Financial System Remains Sound And Resilient. Valuations In Various Markets, Including Stocks, Corporate Debt, And Residential Real Estate, Remain Elevated Relative To Fundamentals. The Ratio Of Total Household And Nonfinancial Business Debt To Gross Domestic Product (GDP) Continues To Decline, Currently At Historically Low Levels Compared To The Past Two Decades. The Capital Levels Reported By Most Banks Remain Well Above Regulatory Requirements, And Reliance On Uninsured Deposits Has Decreased, Although Some Banks Still Face Significant Fair Value Losses On Fixed-Rate Assets. Regarding Funding Risks, While The 2023-2024 Securities And Exchange Commission Reforms To Money Market Funds (Mmfs) Have Partially Alleviated The Vulnerability Of Major Mmfs, Other Lightly Regulated Short-Term Investment Instruments Remain Susceptible To Shocks And Lack Transparency, With Their Asset Size Continuing To Grow. Meanwhile, Hedge Funds Appear To Have High And Concentrated Leverage Ratios.