Oct 21 (Reuters) – The US Federal Reserve should allow its $ 8 trillion balance sheet to shrink over the next few years, Fed Governor Christopher Waller said on Thursday.
“There is no reason to keep it that bulky, so why not let it deplete naturally as stocks expire?” He said.
“(Why not) let the balance sheet go down to another level, smaller size and that way you have more space if you need it? … to bring it back up later,” Waller said at a virtual event hosted by the Official Forum of Monetary and Financial Institutions.
The Fed official added that a large fraction of the balance sheet could be eliminated in the next few years without causing problems for the economy.
Waller also reiterated comments made earlier in the week on inflation, stating that if price increases continue at the current rate in the coming months, central bank officials may need to adopt “a more aggressive monetary policy response.” in 2022.
The Fed is expected to begin cutting its $ 120 billion in monthly asset purchases in November, as it moves away from emergency policies in place to protect the economy from the impact of the COVID-19 pandemic.
(Reporting by Lindsay Dunsmuir. Edited in Spanish by Marion Giraldo)
Disclaimer: This article is generated from the feed and not edited by our team.
