The Federal Reserve has bought $329.4 billion of Treasury bills since it stopped shrinking its balance sheet on December 1, 2025, and bank reserves still sit at $3.003 trillion, barely above the $3 trillion mark. Those figures come from the H.4.1 statistical release the Fed published on Thursday, August 6, covering the week that ended Wednesday, August 5. Bill holdings climbed to $524.9 billion from $195.5 billion on December 3, an increase of nearly 170 percent in eight months. Total assets finished the week at $6.749 trillion, up $10.4 billion over seven days and $212.8 billion since the runoff ended. The detail that matters is what all that buying has not accomplished. Reserve balances rose $58.2 billion on the week but remain below the $3.077 trillion the Fed reported for July 1 in its own Monetary Policy Report. The central bank is adding roughly $10 billion of bills a week and the pool of cash banks park at the Fed is going sideways. Where that liquidity ends up decides how long the purchases continue, and the answer feeds through to the front end of the curve. Consumer borrowing costs are untouched, with prime holding at 6.75 percent on our current prime rate page and the portfolio detailed on our Fed balance sheet tracker.
- The Fed held $524.9 billion of Treasury bills on August 5, up $329.4 billion since balance sheet runoff ended.
- Total assets reached $6.749 trillion, a gain of $212.8 billion since December 3, 2025.
- Reserve balances stand at $3.003 trillion, still below the $3.077 trillion the Fed reported for July 1.
- Agency mortgage backed securities fell $122.8 billion over the same span as principal rolls into bills.
- The prime rate holds at 6.75 percent. The next Fed decision comes September 15 to 16.
What the August 6 Balance Sheet Report Showed
The H.4.1 release, titled Factors Affecting Reserve Balances, lands every Thursday afternoon and is the closest thing markets have to a weekly audit of the central bank. The August 6 edition covered the week that ended August 5. Total assets came in at $6.749 trillion, an increase of $10.4 billion from the prior Wednesday. Treasury securities held outright rose $10.3 billion to $4.53 trillion. Agency mortgage backed securities were flat at $1.931 trillion. The entire weekly increase traced to one line item. Treasury bills rose $10.4 billion to $524.9 billion, and that line has expanded for eight straight months while the coupon book barely moves.
Set the August 5 figures against December 3, 2025, the first H.4.1 published after runoff ended, and the shape of the program becomes clear. Bills have gone from $195.5 billion to $524.9 billion, a gain of $329.4 billion. Total Treasury holdings are up $341.2 billion. Agency mortgage backed securities are down $122.8 billion, because the Fed no longer reinvests mortgage principal back into mortgages. Net of every line, the balance sheet has grown $212.8 billion since the runoff stopped. The Treasury General Account, the federal government’s checking account at the Fed, held $907.3 billion, down $3.5 billion on the week. Usage of the overnight reverse repurchase facility was $1.429 billion on August 6, effectively nothing against its $719.9 billion peak in January 2024.
Why the Fed Stopped Shrinking and Started Buying
The policy chain starts on October 29, 2025. The Federal Open Market Committee announced that day that it would cease the runoff of its securities holdings starting December 1, 2025, and directed the New York Fed’s trading desk to roll over at auction all principal payments from Treasury holdings and reinvest all principal payments from agency securities into Treasury bills. By the Fed’s own accounting, the runoff that began in June 2022 had cut securities holdings by more than $2.2 trillion, roughly $1.6 trillion of Treasuries and $600 billion of agency mortgage backed securities. Holdings fell from 33 percent of nominal gross domestic product to 20 percent.
Stopping the shrinkage was only the first step. At its December 2025 meeting the committee judged that reserve balances had declined to ample levels and began buying shorter term Treasury securities to maintain an ample supply of reserves on an ongoing basis. Those operations are called reserve management purchases, and they are the reason the balance sheet is expanding again. In its July 2026 Monetary Policy Report the Fed said the portfolio had bought nearly $250 billion of Treasury bills since early January, about $160 billion of it reserve management purchases and about $90 billion reinvested mortgage principal. The committee reaffirmed the ample reserves policy at its June meeting. None of this is stimulus. It is plumbing.
The Reserve Number the Fed Is Watching
Reserve balances govern how long the buying continues. They are the deposits commercial banks keep at the Fed, the largest liability on the balance sheet, and the aim is to hold them at a level the committee calls ample, high enough that short term funding markets clear without stress. On August 5 they measured $3.003 trillion, up $58.2 billion from $2.945 trillion a week earlier. Since December 3 they are up $124.6 billion. The awkward part is the direction. The Fed told Congress in July that reserves had grown $54 billion to about $3.1 trillion and remained within the ample range, with the July 1 reading at $3.077 trillion. Five weeks later the figure is lower.
The Fed is not the only claimant on the liquidity it creates. Every dollar of bills the desk buys adds reserves, while currency in circulation, the Treasury General Account and foreign official repo accounts all drain them. The Treasury account alone stood at $907.3 billion on August 5, about $100 billion above where it sat on July 1, and Treasury has signaled heavier bill issuance ahead to fund a wider deficit. The result is a tug of war: Treasury sells bills and pulls cash in, the Fed buys bills and pushes cash out. Reserves have swung between $2.883 trillion in late January and $3.184 trillion in early April without establishing a trend. For as long as that holds, the purchases continue.
What This Means for Your Money
For households the balance sheet is a second order influence, not a lever. Credit cards and variable rate loans track the prime rate, which banks set 300 basis points above the top of the federal funds target range. That range is 3.50 to 3.75 percent, prime has been 6.75 percent since the range settled there, and reserve management purchases move neither one. The next opportunity for a change is the Federal Open Market Committee meeting on September 15 to 16, which you can follow on our Fed meeting schedule.
Where the buying does register is the front end of the yield curve. Steady official demand for Treasury bills puts a bid under short term rates, and short term rates are what money market funds, banks and brokerages price deposits against. The 1-month Treasury bill yielded 3.77 percent on August 5 and the 2-year note 4.18 percent. That front end is the benchmark behind the returns listed on our best high yield savings accounts and best CD rates pages. The long end takes its cue elsewhere. The 10-year note closed at 4.63 percent and the 30-year bond at 5.17 percent, and the Fed buys nothing in that part of the curve, which is why our current mortgage rates page tracks the 10-year rather than the portfolio. If reserves ever fell far enough to force larger purchases, the first symptom would appear in overnight funding costs, not on a monthly statement.
If you want to capture firm short term yields, match the maturity to the calendar instead of guessing at Fed policy. Treasury bills and certificates that mature after the September 15 to 16 meeting lock in today’s front end pricing through the next decision point. Compare the 1-month bill at 3.77 percent against your bank’s savings rate before moving cash, and remember that Treasury bill interest is exempt from state and local income tax.
Frequently Asked Questions
Why is the Fed buying Treasury bills if it is not cutting rates?
Because the two are separate tools. The Fed sets interest rates through the federal funds target range, currently 3.50 to 3.75 percent. It buys Treasury bills to keep bank reserves ample so money markets function. The purchases are operational maintenance of the plumbing, not monetary easing, and they leave the prime rate at 6.75 percent.
Does a growing Fed balance sheet mean inflation is coming back?
Not on these numbers. Quantitative easing after 2008 and in 2020 involved buying long term Treasuries and mortgage bonds to push down long rates and add stimulus. Reserve management purchases buy short term bills to offset the drain from currency growth and the Treasury General Account, so they aim to hold reserves steady rather than to loosen policy. The balance sheet is up $212.8 billion since December 3 while reserves are up only $124.6 billion, showing how much of the buying merely replaces liquidity that leaked out elsewhere.
What are reserve balances and why does $3 trillion matter?
Reserve balances are the cash commercial banks hold in their accounts at the Federal Reserve. They are the settlement asset of the banking system, and the Fed wants them ample enough that banks never scramble for overnight funding. No official threshold is published at $3 trillion, but the level has become the practical marker because the Fed described about $3.1 trillion as within the ample range in July. The August 5 reading of $3.003 trillion sits at the low end of where reserves have traded all year.
Will this change my credit card APR or loan payment?
No. Variable credit card APRs and home equity lines are indexed to the prime rate, and prime moves only when the Federal Open Market Committee changes the federal funds target range. Prime has been 6.75 percent since the range settled at 3.50 to 3.75 percent, and bill purchases carry no mechanical link to it. Fixed rate personal and auto loans were priced when you signed and do not reprice. The next scheduled chance for prime to move is September 15 to 16.
How does Fed bill buying affect savings account and CD rates?
Indirectly, and mildly in savers’ favor. Banks and money market funds price deposit products against short term government yields, so consistent central bank demand for bills helps keep that benchmark firm. The 1-month bill was at 3.77 percent on August 5. The policy rate still sets the ceiling, so a stable target range plus steady bill demand tends to mean deposit yields drift sideways rather than fall. Competition between banks explains most of the gap between the best and average offers.
When would the Fed stop buying Treasury bills?
When reserves are comfortably ample without help. The committee has framed these purchases as ongoing maintenance rather than a program with an end date, so the pace follows growth in currency, the Treasury General Account and other liabilities that drain reserves. The Fed has also created a task force to review the ample reserves framework and the composition of the balance sheet, so the design could change. For now the desk is buying roughly $10 billion of bills a week with no announced stopping point.
Watching the September Fed Meeting
The next H.4.1 release lands Thursday, August 13, and the line to check is reserve balances rather than total assets. If reserves keep sliding while bill holdings climb, the Fed is running to stand still. The Federal Open Market Committee meets September 15 to 16, and its statement will confirm whether the ample reserves policy is unchanged. Until then the transmission chain runs through our Fed prime rate explainer, the shape of the curve on our Treasury yield curve dashboard, and the borrowing side on our U.S. debt tracker.
References
- Board of Governors of the Federal Reserve System, Factors Affecting Reserve Balances, H.4.1, August 6, 2026.
- Board of Governors of the Federal Reserve System, FOMC Communications Related to Policy Normalization.
- Board of Governors of the Federal Reserve System, Monetary Policy Report, July 2026, Part 2.
- Federal Reserve Bank of St. Louis, Reserve Balances with Federal Reserve Banks, Wednesday Level.
- Federal Reserve Bank of St. Louis, Securities Held Outright, U.S. Treasury Bills, Wednesday Level.
- Federal Reserve Bank of St. Louis, Overnight Reverse Repurchase Agreements, Treasury Securities Sold by the Federal Reserve.
- Federal Reserve Bank of St. Louis, Bank Prime Loan Rate.
- Board of Governors of the Federal Reserve System, 2026 Speeches.
