Miran Cautions Reducing Fed Balance Sheet Could Take Years

Fed Governor Stephen Miran said the Fed can shrink its balance sheet meaningfully from current levels but that the process will likely take years and require several steps. His comments signal a gradual, multi-step approach to balance-sheet normalization that could exert upward pressure on Treasury and mortgage yields over time and shape market expectations for monetary policy.

Analysis

Fed Governor Stephen Miran said the Fed can shrink its balance sheet meaningfully from current levels but that the process will likely take years and require several steps. His comments signal a gradual, multi-step approach to balance-sheet normalization that could exert upward pressure on Treasury and mortgage yields over time and shape market expectations for monetary policy.