(From the FT.com) A senior official at the Federal Reserve Bank of New York on Monday said the US central bank should shrink its balance sheet “in a gradual and passive manner” as it moves towards tightening monetary policy.

Brian Sack, executive vice-president at the New York Fed, warned that a rapid sale of the assets accumulated during the financial crisis could be detrimental, leading to an unwanted spike in long-term interest rates.

“A decision to shrink the balance sheet more aggressively could be disruptive to market functioning,” Mr Sack told the National Association for Business Economics at a speech in Arlington, Virginia.

“A more aggressive approach would risk an immediate and substantial rise in longer-term yields that, at this time, would be counterproductive for achieving the [federal open market committee’s] objectives.”

Read more here: NY Fed warns against rapid sale of assets