George Calls for Fed’s Balance Sheet to Shrink on ‘Autopilot’
- Kansas City Fed leader urges ‘gradual and smooth’ reductions
- FOMC shouldn’t review balance sheet each meeting, George says
Federal Reserve Bank of Kansas City President Esther George discusses monetary policy and the state of the U.S. economy. She speaks with Bloomberg's Michael McKee on 'Bloomberg Markets.' (Source: Bloomberg) (Source: Bloomberg)
Federal Reserve Bank of Kansas City President Esther George urged the Federal Open Market Committee to start shrinking its $4.5 trillion balance sheet this year, making reductions automatic and not subject to a quick reversal.
“Balance sheet adjustments will need to be gradual and smooth, which is an approach that carries the least risk in terms of a strategy to normalize its size,” George at the Levy Economics Institute of Bard College in New York. “Importantly, once the process begins, it should continue without reconsideration at each subsequent FOMC meeting. In other words, the process should be on autopilot and not necessarily vary with moderate movements in the economic data.”