Kevin Warsh said the Fed still needs to shrink its large balance sheet, but any
major policy move will take time and be fully communicated. Decisions will
undergo extensive public discussion and will not be implemented until financial
markets fully understand the measures. He noted it took roughly 18 years to
build the current balance sheet and that it now has fiscal-like attributes.
Warsh said more time is needed to determine the balance-sheet policy path, he
remains open-minded and will not pre-judge, and he expects interest-rate policy
to remain the Fed’s primary tool.
