MENLO PARK, Calif., May 29 (Reuters) - Kansas City Fed President Esther George on Thursday said she is open to keeping the Fed’s balance sheet large even as it begins to remove policy accommodation.
The Fed’s balance sheet now tops $4 trillion after years of buying bonds to boost the economy, a policy that George has opposed. At Stanford University’s Hoover Institution conference on central banking she was asked how she feels about keeping the Fed’s balance sheet big.
“I will look to people like John Cochrane to help inform how we should think about this,” George said.
Cochrane, a University of Chicago professor, presented a paper earlier at the conference in which he argued the Fed can maintain a big balance sheet without causing inflation because it has the ability to pay interest on excess bank reserves. (Reporting by Ann Saphir; Editing by Lisa Shumaker)