Federal Reserve Bank of Dallas President Robert Kaplan said Jan. 15 that he would like the Federal Reserve to find a way to temper balance sheet growth while still adequately managing repo operations.

The Fed should continue with its monthly purchases of about $60 billion in Treasury securities through March or April, Kaplan said, following a speech at The Economic Club of New York. He added that the Fed must then "find a way to curtail the balance sheet" while using other tools, such as a standing repo facility, that would activate when a spike in the repo rate occurs.

The statement comes amid the Fed's ongoing injection of billions of dollars into the financial system since mid-September 2019, when a liquidity crunch hit markets and caused the Fed's benchmark interest rate to breach its 25-point target range.

Kaplan said he feared that ongoing growth in the Fed balance sheet will fuel "elevated levels of risk assets," which may pose a threat to financial stability.

Additionally, Kaplan said he expects economic growth to fall in a range between 2% and 2.25% in 2020, driven by a strong consumer sector. He also called for inflation to continue gradually moving toward 2%.