According to Odaily, the New York Federal Reserve stated on Tuesday that the Federal Reserve's balance sheet is a 'key tool' for supporting the Federal Open Market Committee's (FOMC) monetary policy objectives and maintaining financial stability in 'rare circumstances.' The Federal Reserve primarily sets its monetary policy stance by adjusting the target range for the federal funds rate. However, the FOMC has also utilized the purchase of U.S. Treasury securities and agency mortgage-backed securities (MBS) to ease overall financial conditions, particularly when interest rates are near zero. These purchases have also been employed to address market dysfunctions, such as those experienced in March 2020 when the COVID-19 pandemic disrupted financial markets.

Christian Cabanilla, Eric LeSueur, and Josh Younger of the New York Federal Reserve wrote that the FOMC has also directed the Federal Reserve to reduce the size and holdings of its balance sheet to levels consistent with the efficient and effective implementation of monetary policy under an ample reserves regime.