Veterans of the U.S. Federal Reserve urged incoming Fed Chair Kevin Warsh to focus less on shrinking the central bank’s balance sheet and more on establishing clearer principles for how it should be deployed during future economic and financial shocks, Reuters reported.
The Fed’s balance sheet currently stands at about $6.7 trillion, largely consisting of U.S. Treasury and mortgage-backed securities accumulated during years of quantitative easing and pandemic-era stimulus measures. While some lawmakers and policymakers have criticised the size of the balance sheet as excessive intervention in financial markets, former Fed officials argued that the debate should centre more on the composition and purpose of the holdings rather than their absolute size.
