Fed Official Waller Supports Current Pace of Balance Sheet Reduction

Investing.com — Federal Reserve Board Member Christopher J. Waller supported the decision to maintain the federal funds target range during the latest Federal Open Market Committee (FOMC) meeting. Waller also expressed a preference for sustaining the current pace of reduction in security assets.

According to Waller, shrinking the Federal Reserve’s balance sheet is crucial for normalizing monetary policy and reducing excess reserves in the banking system. He mentioned that as the banking system approaches adequate reserve levels, it may be appropriate to further slow down or halt the redemption of security assets. However, he emphasized that reserve balances currently exceed $3 trillion, indicating that this target has yet to be reached. Waller noted the lack of evidence from money market indicators suggesting the banking system is nearing sufficient reserve levels.