**[Walsh Pushes for Federal Reserve Institutional Reform, but Balance Sheet Reduction Progresses Slowly]** BlockBeats News, September 25 — 127 days after Kevin Walsh assumed the role of Federal Reserve Chair, his promised institutional reforms have begun to take shape. He has shortened the duration of post-FOMC press conferences, adjusted seating arrangements for reporters, and, more importantly, weakened traditional forward guidance by refusing to provide individual interest rate forecasts in the dot plot, marking a clear departure from his predecessor's communication style. Walsh's new policy framework places greater emphasis on overall financial conditions rather than the traditional concept of a "neutral rate." He argues that the neutral rate is "only academically useful" and that determining whether policy is tightening should involve a comprehensive observation of asset prices, U.S. Treasury trading, the dollar exchange rate, credit costs and supply, as well as commodity prices. Given the strength of the stock market, employment, and credit markets, he may support further rate hikes if inflation remains elevated. Last week, the Federal Reserve unanimously approved a 25 basis point rate hike, marking the first increase in 2023. Currently, the market estimates a 70% probability of another rate hike in October and has priced in the possibility of up to two additional hikes by March next year. However, Walsh's efforts to reduce the Federal Reserve's $6.7 trillion balance sheet have been progressing slowly. Some FOMC members prefer to wait for the five working groups he established to submit their reports early next year. Meanwhile, the yield on the 10-year U.S. Treasury has surpassed 5%, further complicating the Fed's current balance sheet reduction efforts and its plans to increase bond supply to the market. [Original Link]