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Stock impact report

Fed chair nominee Warsh may want smaller Fed holdings, but that's not easy to do [Yahoo! Finance Canada]

Sumitomo Mitsui Financial Group Inc Unsponsored American Depositary Shares (Japan) (SMFG) 
US:NYSE Investor Relations: smfg.co.jp/english/investor
Feb 2 (Reuters) - Kevin Warsh, tapped to become the next Federal Reserve chair, may want to significantly contract the central bank's multi-trillion-dollar balance sheet, but experts agree that financial realities strongly indicate accomplishing this goal will be difficult and slow, if it can be done at all. That's because Fed holdings and the regime that's ?grown to manage interest rates in a system that is flush with cash is not easy to wind back while maintaining market stability and achieving monetary policy goals. It could be ?even trickier for a Fed chair who is likely to seek easier short-term borrowing costs, because anything that notably contracts central bank bond holdings actually tightens financial conditions. Warsh, who was a Fed governor between 2006 and 2011, has argued that large Fed ?holdings distort finances in the economy and what the Fed now holds should be slashed. In a Wall Street Journal opinion story from November, he wrote “the Fed's bloated balance sheet Show less Read more
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