Quantitative Tightening (2022–2024): The Largest Balance Sheet Reduction in a Century

Between 2022 and 2024, the Federal Reserve undertook the most significant balance sheet contraction since the early 1920s. Over 33 consecutive months, from Q1 2022 to Q4 2024, the balance sheet shrank by 23.0%, falling from $8.94 trillion to $6.89 trillion. In comparison, the previous round of quantitative tightening, which concluded in August 2019, saw a smaller reduction of 16.4%.