1011 ET - In a speech in Albuquerque, N.M., Kansas City Fed President Jeffrey Schmid suggests that the central bank should explore ways to shrink its balance sheet over time. That goal aligns him with the longstanding preference of Kevin Warsh, Trump's nominee to be the Fed's next chair. Schmid acknowledges that the Fed's current balance sheet, far larger than before the pandemic, reflects greater demands for currency and bank reserves, which make up most of the Fed's liabilities. But regulatory changes and innovations in the payments system could push down banks' demand for reserves. That would be "not only feasible in my opinion, but something that should be pursued," Schmid says. (matt.grossman@wsj.com; @mattgrossman)

(END) Dow Jones Newswires

February 11, 2026 10:12 ET (15:12 GMT)

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