Fed's 'ample reserves' approach is a focus of Warsh's balance sheet review

New Federal Reserve Chair Warsh told the House Financial Services Committee that a review of the Fed's $6.8 trillion balance sheet will examine the "ample reserves" regime requiring large bond holdings. He emphasised that any changes would be well-deliberated, public, and gradual, noting it took nearly 18 years to build the current balance sheet. He also stated that during crises the Fed should be willing to act aggressively with its balance sheet, but in normal times monetary policy should be driven almost exclusively by interest rate policy.