According to Odaily Planet Daily, the New York Fed published an article on Tuesday saying that the Fed's balance sheet is a "key tool" used to support the FOMC's monetary policy goals and "support financial stability in rare circumstances."
The Fed sets the stance of monetary policy primarily by adjusting the target range for the federal funds rate, but the FOMC has previously purchased U.S. Treasury securities and agency mortgage-backed securities (MBS) to help ease overall financial conditions, particularly when interest rates were around zero.
The FOMC also directed the Fed to reduce the size of its balance sheet and its holdings to “levels consistent with the efficient and effective implementation of monetary policy in a regime of ample reserves,” wrote Christian Cabanilla, Eric LeSueur and Josh Younger of the New York Fed.
