Where Data Tells the Story
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In response to the COVID-19 pandemic, the Federal Reserve more than doubled its balance sheet, expanding by 115% from $4.16 trillion in February 2020 to a peak of $8.94 trillion in March 2022. Beginning in Q1 2022, the Fed entered a period of quantitative tightening that lasted 42 months, reducing total assets by $2.33 trillion (–26.1%) to $6.61 trillion by September 2025.
Treasury securities drove most of the contraction, falling by $1.56 trillion (–27.1%) and accounting for two-thirds of the overall reduction. Mortgage-backed securities (MBS) declined by $0.62 trillion (–22.7%). In Q3 2025, the pace of balance sheet shrinkage eased, with the year-over-year contraction slowing to 6.7%.