Balance sheet not an ‘active’ policy tool for normal times, says Fed’s George
Reductions in Fed’s balance sheet should be on “autopilot”, says George
The Federal Reserve’s balance sheet should not be used as an “active tool” outside of periods of severe financial or economic stress, the president of the Federal Reserve Bank of Kansas City has said.
Speaking on April 18, Esther George said reductions in the Fed’s balance sheet will need to be “gradual and smooth” or, in other words, the process should be on “autopilot”.
George said reductions should “not necessarily vary with moderate movements in the economic data”. To do so, she said
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