Fed Likely to Gradually Manage Balance Sheet Reduction Under Kevin Warsh

Federal Reserve Chair nominee Kevin Warsh is expected to adopt a cautious approach to shrinking the Fed's $6.6 trillion balance sheet to avoid market disruptions, according to Citigroup strategists and U.S. Treasury Secretary Scott Bessent. While Warsh has advocated for significant reductions, officials indicate that any major decisions could take up to a year, with the Fed maintaining a relatively large balance sheet under an ample-reserves framework to support financial stability.