Federal Reserve's $290 Billion Treasury Purchase Fuels Hidden Easing Debate

The Federal Reserve's announcement of purchasing approximately $290 billion in U.S. Treasury bonds from December 11, 2025, to June 30, 2026, has intensified the debate over 'hidden easing.' Lacy Hunt, an economist at Hoisington Investment Management, interprets this as effectively a loosening measure, noting that bank deposits and loans have increased, with the annual growth rate of other deposit liabilities (ODL) reaching 8.9%. Hunt argues that the disinflationary structure caused by globalization has weakened, explaining that trade reorganization and semiconductor localization are driving up costs. He suggests that the long-term equilibrium inflation range is shifting to 3.5% to 4.5%, with levels exceeding 5% presenting a risk scenario. In contrast, the Fed explains that the purchase of short-term Treasuries was conducted for reserve management purposes, stating that it has bought about $250 billion since January 2026. Fed Vice Chair Philip Jefferson emphasized that this action does not constitute quantitative easing. The differing interpretations of the purpose and effects of the purchases highlight the ongoing debate. This controversy could also impact interest rates and the cryptocurrency market, as risk assets like Bitcoin (BTC) are sensitive to changes in liquidity and inflation expectations.

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