---
title: "Williams stated that the use of balance sheet tools is not \"unconventional operation.\""
description: "John Williams, President of the Federal Reserve Bank of New York, stated that central banks' influence on the economy through balance sheet policies should not be viewed as \"unconventional tools.\" He "
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/259878989.md"
published_at: "2025-10-03T10:10:21.000Z"
---

# Williams stated that the use of balance sheet tools is not "unconventional operation."

> John Williams, President of the Federal Reserve Bank of New York, stated that central banks' influence on the economy through balance sheet policies should not be viewed as "unconventional tools." He pointed out that a narrow understanding of monetary policy leads to skepticism about forward guidance and balance sheet policies. He cited economic research showing that asset purchase policies remain effective even when short-term interest rates are low, aligning with the long-standing tradition of monetary policy. Williams emphasized that the application of policies should be determined by specific circumstances and risks, rather than being a matter of principle

John Williams, President of the Federal Reserve Bank of New York, suggested that the practice of central banks influencing the economy through balance sheet policies should not be viewed as "using unconventional tools."

In a prepared speech for an event in Amsterdam on Friday, Williams stated that people's understanding of monetary policy is often limited to "the overly narrow perspective of setting short-term interest rates."

He pointed out, "This means that other monetary policy actions already adopted—such as forward guidance and balance sheet policies—are identified as 'unconventional operations' and are thus questioned to some extent."

"This narrow understanding of monetary policy contradicts the history of monetary economics and the traditional practices of central banks," he added.

These remarks come at a time when the Federal Reserve is facing criticism in some areas this year due to its asset purchase operations and the overall size of its balance sheet.

U.S. Treasury Secretary Scott P. Basset recently stated in an article that after the 2007-2008 financial crisis, the Federal Reserve, in the context of short-term interest rates being close to zero, adopted "large-scale asset purchases as a monetary policy tool," a practice that distorted the market and "interfered" with the independence of the Federal Reserve. He characterized such asset purchases as "unconventional policy tools."

Former Federal Reserve Governor Kevin Walsh shares a similar view and is currently one of the candidates being considered by President Donald Trump for the next Federal Reserve Chair. Walsh has long criticized several of the Federal Reserve's bond-buying programs, particularly opposing such operations during non-financial crisis periods; in recent months, he has also suggested that the Federal Reserve should reduce the size of its balance sheet.

In his remarks on Friday, Williams cited relevant economic research indicating that even when short-term interest rates are at extremely low levels, policies such as asset purchases remain effective.

"These policies are not 'emergency,' 'crisis-response,' or 'last-ditch' measures, but are fully consistent with the long-standing traditions of monetary policy theory and practice," Williams stated.

He added, "Of course, how and when to use these policies depends on the specific situation and the risks faced by policymakers. But this is a matter of strategy and execution, not a matter of principle or strategy."

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.