Kansas City Fed Honcho On Fate Of Economy

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In the interview, George said her colleagues should press forward with their ongoing efforts to shrink the size of the Fed's balance sheet. Along with its efforts to raise short-term rates to combat high levels of inflation, the Fed is reducing the size of its holdings of securities and cash. From a peak of nearly $9 trillion this summer, the Fed now holds $8.6 trillion, as it sheds nearly $100 billion per month in bonds it now owns.

The Fed has given no guidance about where it will stop its drawdown. A growing number of analysts believe the Fed may have to stop this year due to looming shortages of reserves in the banking system that would threaten its ability to have strong control over its interest rate target.

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Fed's George: It will be key to hold rates up once hikes end

Kansas City Federal Reserve leader Esther George said on Thursday that she hopes the central bank will continue its efforts to shrink its balance sheet, while also warning that she believes the Fed will need to press forward with rate rises and keep them high for some time once the tightening process ends.