Powell says eventually Fed will expand balance sheet again

By Michael S. Derby

NEW YORK (Reuters) -Federal Reserve Chair Jerome Powell said the U.S. central bank, having just stopped shrinking its balance sheet, will have to start growing it again at some point.

In order to keep enough liquidity in the financial system to keep interest rates under control, at some point the Fed will again expand its holdings, Powell said after the latest Federal Open Market Committee meeting.

Reserves will need to grow “to keep up with, you know, the size of the banking system and the size of the economy, so we’ll be adding reserves at a certain point,” he said.

(Reporting by Michael S. Derby)