The Fed is actually in a pretty awkward position right now—it needs to come up with a reasonable excuse for the next round of liquidity injection, but can’t just open the floodgates like before.

After all, blatant QE is now too politically sensitive.

So they’ve decided to repackage things and make the liquidity injection look more “technical.” We might see the first signs of this at the upcoming FOMC meeting.

Just look at their recent moves:

Starting December 1, maturing agency debt and MBS are no longer simply rolled off the balance sheet; all principal is being reinvested into short-term Treasury bills. When Treasuries mature, they’re being rolled over as well, and the balance sheet is no longer being actively reduced.

The New York Fed’s trading desk is handling this directly—since December, they’ve been buying T-bills in the secondary market to absorb these reinvestment funds, and will publish a detailed plan each month.

The last meeting’s minutes were very clear: increasing the proportion of short-term Treasuries allows for more flexible policy operations and greater leeway in liquidity management, all without increasing the overall level of reserves.

Williams was even more direct in his November speech: once reserves are deemed “ample,” the next step is to gradually start buying assets.

In other words, over the next few months, we’ll likely see an operation that “isn’t called QE, but does exactly what QE does.”

The hottest topic on Wall Street right now is RMP, or Reserve Management Purchases.

The Fed’s explanation sounds harmless: the economy is growing, and naturally, the market’s demand for money is increasing; to prevent a shortage of reserves from causing short-term rates to spike, they need to passively buy some short-term Treasuries to “top up” reserves.

The goal is simple—don’t let the payment system seize up. The operation is also restrained—only buying short-term debt, not touching long-term assets.

So why does the market see this as “QE in disguise”?

Because the underlying logic hasn’t changed at all:

What is QE? Print money out of thin air → buy bonds → inject cash into the market.

What about RMP? Print money out of thin air → buy bonds → inject cash into the market.

The only differences are the name and a slightly smaller scale, but the direction is exactly the same: balance sheet expansion, liquidity flowing back into the market.

For risk assets, this difference doesn’t matter at all. As long as the Fed is “buying,” the market’s liquidity level will get pushed higher.