NextFin news, Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, expressed on Thursday, September 25, 2025, his preference for shrinking the Federal Reserve's balance sheet as much as possible. Speaking in Kansas City, Schmid emphasized that the smaller the Fed's balance sheet, the better it would be for the economy.
Schmid's remarks come amid ongoing discussions within the Federal Reserve about monetary policy and balance sheet management. He highlighted that reducing the balance sheet could help the central bank maintain effective control over monetary policy and support economic stability.
The Federal Reserve's balance sheet expanded significantly during recent years due to asset purchases aimed at supporting the economy through various crises. Schmid's comments suggest a continued focus on normalization by shrinking these holdings.
In addition to his views on the balance sheet, Schmid has previously advocated for cautious approaches to interest rate adjustments, reflecting a balanced stance on monetary policy amid evolving economic conditions.
Schmid's statements were reported by MarketScreener and reflect his position as a voting member of the Federal Open Market Committee (FOMC), which sets U.S. monetary policy.
The Federal Reserve's balance sheet size and its management remain key topics for policymakers as they navigate inflation, employment, and financial stability goals.
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