After the December FOMC meeting, the Federal Reserve officially ended QT (quantitative tightening) and shifted to launching the Reserve Management Purchase Plan (RMP). The initial monthly scale is about $40 billion, mainly directed toward short-term Treasury bills (T-bills), with the possibility of extending to maturities of up to 3 years if necessary.

Does this sound like QE? The market indeed calls it that. But the Fed’s own statement is that this is purely a technical operation aimed at maintaining sufficient reserve levels to cope with liquidity fluctuations during the annual economic growth cycle and the April tax season. It is not a policy shift, much less a traditional easing.

The key difference lies here—

While RMP and QE both appear to involve balance sheet expansion and bond purchases, their core mechanisms are entirely different. RMP buys short-term Treasuries, starting at only $40 billion and likely to decrease significantly after a few months; QE, on the other hand, typically targets medium- to long-term Treasuries and MBS, with monthly injections often reaching hundreds of billions. RMP deliberately maintains a low profile, purely for liquidity maintenance; QE is usually accompanied by strong expectations of easing policies.

Why does the market insist on viewing this as a QE preview? There are several reasons. First, the operational forms are similar, both involve balance sheet expansion and bond purchases; second, there was a "mini-QE" precedent in 2019; third, current liquidity conditions are indeed marginally easing, compounded by expectations of Trump-era policies, making it easy to interpret as a prelude to large-scale liquidity injection.

But rationally speaking (based on information up to December 28), RMP is essentially routine maintenance after QT exit. Its scale is limited, and its sustainability is constrained, likely to slow down rapidly after the April 2026 tax season. Unless there are obvious problems in the economy or markets—such as inflation spiraling out of control again or turmoil in the money markets—RMP is unlikely to evolve into genuine QE.

So the key point to watch is this: the actual implementation strength in the first half of 2026. Only then can we truly determine whether this is just routine maintenance or the beginning of easing policies.