Key facts
- Fed policymakers will consider balance sheet task force recommendations early in the first quarter of 2027.
- The Fed's bond holdings peaked at about $9 trillion in the summer of 2022.
- Current Fed holdings are around $6.8 trillion.
Federal Reserve Chair Kevin Warsh indicated on Wednesday that the central bank's policymakers will begin deliberating on the findings of a task force focused on the Fed's balance sheet in early 2027. Warsh stated that the task force's conclusions and recommendations would likely be presented to the Federal Open Market Committee in the first quarter, though this timeline could be subject to change. He noted that while the issue is important, any changes resulting from the task force's work are unlikely to have a material effect on policymaking in the immediate term. The Fed's balance sheet expanded significantly following the 2008 financial crisis and the COVID-19 pandemic, reaching a peak of approximately $9 trillion in the summer of 2022. Currently, the holdings stand at around $6.8 trillion, with further reductions being constrained by concerns over potential money market volatility and the need for significant changes to the Fed's operational toolkit and regulatory frameworks.