The remark signals a preference for limiting asset purchases to periods of genuine market stress, challenging the idea of a standing quantitative easing backstop.
Warsh said the Federal Reserve's balance sheet should remain as small as possible and grow only during genuine crises. The comment points to a policy preference against a persistent quantitative easing approach, in which central bank asset purchases are used more routinely, and instead favors reserving balance-sheet expansion for periods of acute stress.