Fed’s Williams hints that shrinkage in bond buying could start even if business


John C. Williams, chairman of the Federal Reserve Bank of New York and a powerful monetary policy official, hinted that it is possible for the central bank to begin removing its support for the economy before the end of the year, even as the job market strengthens. grows at a sluggish pace in the coming months.

Fed Buys $120 billion in government-backed bonds Every month to help the economy by keeping interest rates low and money flowing. Policymakers are debating when to start slowing this program. Them said in December He said they would do so only after they had made “significant progress” toward maximum employment and inflation, which averaged 2 percent over time.

Key policymakers have made it clear that the inflation side of this target is satisfied. prices have increased significantly this year, but they expect further progress in employment. Evaluation of the job market has become complex with the rise of coronavirus infections due to the delta variant, and Salary increases slowed in August.

Mr Williams, who consistently votes on monetary policy and is the foremost among the central bank’s 12 regional policymakers, told reporters Wednesday that he is looking at cumulative employment progress rather than month-to-month changes. Weakening employment growth does not make a start to the so-called contraction impossible.

“It’s not a speed condition,” said Mr Williams. “Actually, where are we on this road to maximum employment, relatively speaking?”

He added that he is looking not only at job gains, but also at measures such as labor force participation for a “complete picture” of how much progress the job market has made.

“Some months come stronger, some don’t,” said Mr Williams. “It’s really about accumulation.”

“We’ll have to wait and see for the data to come in,” he added.

Mr Williams said earlier in the day that if the economy continues to improve as he expected, “it may be appropriate to start slowing the pace of asset purchases this year”. Withdrawing the bond purchase will be just the first step in removing support, and the Fed’s policy rate is expected to stay close to zero for a while.

His comments are that the Fed is generally “Beige Book“Delta” was cited 32 times as employers reported that growth slowed somewhat moderately from early July to August.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *