Battles to shrink the Federal Reserve's balance sheet begin
Incoming Federal Reserve chair Kevin Warsh faces immediate challenges in his stated goal of shrinking the central bank's substantial balance sheet. The Fed's assets, which ballooned to nearly $9 trillion at their peak, have been a key tool for economic stabilization and stimulus, particularly since the 2008 financial crisis. While Warsh views the large balance sheet as having caused harm and prefers direct rate cuts for broader benefit, reducing it could lead to higher borrowing costs and potential market instability if not managed carefully. AI
