Lorie Logan, an executive vice president in the Markets Group of the Federal Reserve Bank of New York, noted on Monday that the process of normalizing the Fed's balance sheet should be gradual, adding that the predictable way worked quite well in the past.
Logan also said that the previous experience shows that setting caps on monthly redemption amounts helps ensure the balance sheet shrinks in a measured and predictable way.
According to her, the key issue is that the balance sheet's long-run size is uncertain as banks’ demand for reserves varies over time.