Fed's Warsh says any balance sheet policy change won't be a surprise

By Michael S. Derby

NEW YORK, July 1 (Reuters) - Federal Reserve Chairman Kevin Warsh said Wednesday that while he hasn’t changed his mind that a large central bank balance sheet should be shrunk, any notable change in policy on this matter will take time and be well communicated.

“Decisions will be well deliberated publicly, well understood, and will not be implemented until financial markets have come to understand what those are,” Warsh said at a European Central Bank event in Sintra, Portugal. “It took us about 18 years to find our way into this big balance sheet, which again, in my biased view, borders on fiscal policy" and it will take some time to figure out where things go next. "I'm open-minded on the question -- we're not going to prejudge it, but I want interest rate policy" to be the main tool used by the central bank, the official said.


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