[Morgan Stanley: Changes at the Federal Reserve under Waller will first be reflected in balance sheet reduction] Golden Finance reports that Morgan Stanley stated in a report that under Waller's leadership at the Federal Reserve, any substantive changes are more likely to gradually manifest through balance sheet policies rather than interest rates. Reducing the size of the Federal Reserve's balance sheet implies lowering banks' demand for reserves, a process that requires time and adjustments to the regulatory framework. Morgan Stanley added: 'All else being equal, a Federal Reserve that adopts a smaller "presence" in communication and balance sheet size should lead to a steeper yield curve.'