Logan Favors Rule Changes to Shrink Fed Balance Sheet

Dallas Fed President Lorie Logan said the Fed could shrink its balance sheet by reducing banks' demand for reserves through regulatory changes, remarks made at an event in Dallas (Bloomberg). This signals a potential non-rate path to monetary tightening that could lower reserve levels and tighten money-market conditions and yields if enacted.

Analysis

Dallas Fed President Lorie Logan said the Fed could shrink its balance sheet by reducing banks' demand for reserves through regulatory changes, remarks made at an event in Dallas (Bloomberg). This signals a potential non-rate path to monetary tightening that could lower reserve levels and tighten money-market conditions and yields if enacted.