Fed's Miran: Shrinking the size of the balance sheet is desirable
By Haresh Menghani
Updated: 27 Mar 2026
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Federal Reserve (Fed) Governor Stephen Miran said on Thursday that shrinking the size of the balance sheet allows for easier interest rate policy. Those who think that the Fed balance sheet can’t shrink ‘simply lack imagination’, Miran added further.
Federal Reserve (Fed) Governor Stephen Miran said on Thursday that shrinking the size of the balance sheet allows for easier interest rate policy. Those who think that the Fed balance sheet can’t shrink ‘simply lack imagination’, Miran added further.
Additional quotes:
There’s a path to shrink Fed holdings by $1 trillion to $2 trillion.
However, he emphasized that pursuing a smaller balance sheet would take several years.
Shrinking Fed holdings depend on changing demand for reserves.
A smaller balance sheet gives the Fed more options in the next crisis.
Large balance sheet distorts markets, creates problems for Fed.
Does not see a case to sell any Fed holdings.
Not advocating for a return to the scarce reserves system.
More active Fed market interventions could ease balance sheet size.
The Fed should destigmatize repo operations and the discount window.
Market reaction:
The remarks do little to provide impetus for the US Dollar (USD), as the market focus remains fixed on developments surrounding ongoing conflicts in the Middle East.
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