NY Fed's Williams: Officials won't wait as long to shrink balance sheet

BY Reuters | ECONOMIC | 01/14/22 01:00 PM EST

Jan 14 (Reuters) - As Federal Reserve officials remove the extraordinary support offered to the economy during the pandemic, the next step will be to raise interest rates and then reduce the size of the central bank's balance sheet, New York Federal Reserve Bank President John Williams said Friday.

Policymakers will likely not wait as long as they have previously to begin reducing more than $8 trillion in bond holdings, said Williams, noting that the balance sheet is much larger than it was after the last financial crisis.

"The situation is so different in terms of where the economy is and the direction the economy is going," Williams told reporters.

The policymaker said it makes sense for the central bank to remove accommodation this year after seeing dramatic improvement in the labor market and elevated inflation.

(Reporting by Jonnelle Marte; Editing by Andrea Ricci)

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