The Federal Reserve's balance sheet has seen a significant decline, dropping by $66 billion in September to reach $7.05 trillion, marking its lowest level since 2020. This reduction is part of the ongoing quantitative tightening (QT) strategy, which has seen the Fed shed approximately $1.92 trillion since ending its pandemic-era asset purchases in April 2022.

This latest milestone reflects the Fed's careful approach to managing its assets while aiming to avoid market disruptions. As the balance sheet continues to contract, it will be interesting to observe the implications for monetary policy and the broader economy.

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