New York Federal Reserve Bank President John Williams has refuted claims that the central bank's use of balance sheet policies to influence the economy constitutes reliance on unconventional policy tools.

In prepared remarks for a Friday event in Amsterdam, Williams noted that monetary policy is often viewed through an "overly narrow lens," being understood merely as the setting of short-term interest rates.

"By this logic, other monetary policy tools—such as forward guidance and balance sheet policies—are viewed as 'unconventional' and therefore somewhat suspect," he stated.

"This narrow understanding of monetary policy is at odds with the history of monetary economics and central banking practice," he remarked.

Williams made these comments as the Federal Reserve faces criticism from multiple quarters this year over its implementation of asset purchase programs and the size of its balance sheet, which currently stands at approximately $6.6 trillion.

Treasury Secretary Scott Bessent pointed out in a recent article that the Fed's adoption of "large-scale asset purchases as a monetary policy tool" following the 2007-08 financial crisis—when short-term rates were near zero—has led to market distortions and "interfered" with the Fed's independence. He characterized such purchases as "unconventional policy tools."

Kevin Warsh, a former Fed governor who is among the candidates Donald Trump is considering for the next Fed chair position, holds similar views. Warsh has long criticized the Fed's various bond-buying programs, particularly those implemented during non-crisis periods, and has recently advocated for the Fed to reduce its balance sheet.

On Friday, Williams cited economic research indicating that policies such as asset purchases remain effective even when short-term rates are very low.

"These measures are not 'emergency,' 'crisis,' or 'break the glass' policies, but are fully consistent with the long tradition of monetary theory and practice."

"Of course, how and when policies are implemented depends on the specific circumstances and risks facing policymakers," he added. "But this is a matter of tactics and execution, not principles or strategy."