Monetary policy and the Fed’s balance sheet are distinct tools in its arsenal that “should not be conflated or confused,” Federal Reserve Board governor Kevin Warsh said yesterday.

“In my view, the Fed should pursue a deliberate, well-communicated strategy that clearly differentiates the path of the Fed’s policy rate from the size and composition of its balance sheet,” Warsh told the Atlanta Rotary Club, according to a prepared text released by the Fed.

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