Walsh: If the Federal Reserve adjusts the balance sheet, the market will be well informed

On 14 July, Federal Reserve Chairman Walsh indicated that, should the Federal Reserve adjust its balance sheet policy, advance notice, explanation and open discussion would be undertaken in advance, with sufficient lead time given to financial markets. During the hearing, Walsh indicated that his views on the large balance sheet issues of the Fed were well known to the outside world, but he was reluctant to prejudge the decision to be taken by the newly established balance sheet task force of the Fed. Noting that the balance sheet fell within the realm of monetary policy, he stressed that the Fed should avoid becoming involved in fiscal policy. “I assure you that if there is a change in the balance sheet policy, we will have an advance briefing, explanation and discussion. Before any adjustment to the balance sheet policy, either the Commission or the financial market as a whole will be given sufficient advance notice.”