Financial Times: Wosh's tapering plan faces resistance and will be implemented gradually

DeepFlowTech · 2026-03-03T06:47:11+00:00

Kevin Wash plans to gradually reduce the Federal Reserve's balance sheet, facing resistance, and it is unlikely to return to pre-2008 levels. He emphasizes the need for extensive consultation and internal research, advocating for a "third model" of managing the balance sheet.

DeepFlowTech

2026-03-03 06:47:11

Abstract generation in progress

Deep Tide TechFlow News, March 3rd, according to the Financial Times, Kevin Warsh’s plan to shrink the Federal Reserve’s balance sheet will proceed only slowly. As a Trump-nominated Federal Reserve Chair candidate, Warsh faces resistance in reducing one of the Fed’s most influential tools. Warsh has repeatedly stated that the Fed’s nearly $7 trillion balance sheet reflects overreach into Congress’s authority and pointed out that large-scale bond purchases under previous quantitative easing programs have distorted financial markets.

However, sources familiar with the matter say Warsh will only begin adjusting the Fed’s balance sheet after extensive consultations with banks and the broader public about potential impacts. These sources also mentioned that he is unlikely to push the balance sheet back to pre-2008 financial crisis levels and will call for internal research and academic discussions before taking action. Warsh also believes that the 2008 crisis revealed that over-reliance on the interbank market poses risks to financial stability and publicly advocates for a “third model” of managing the balance sheet. Some regional Fed presidents are willing to consider gradually shifting to a new balance sheet management approach. (Jin10)

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