“A member of the Federal Reserve’s inner circle Monday promoted a plan for the central bank to scale back the pace of its bond-buying program as the jobs market improves, though he stressed that a decision on how to proceed is far from imminent.
William Dudley, president of the Federal Reserve Bank of New York, said in a speech the Fed “should calibrate” how much U.S. debt and mortgage-backed securities it buys each month “by allowing the flow rate of purchases to respond to material changes in the labor market outlook.”
Mr. Dudley described the tapering proposal as somewhat more certain than Fed Chairman Ben Bernanke did last week after the central bank’s two-day policy meeting. Mr. Bernanke stuck with the conditional tense, saying the Fed “may adjust” the pace of its bond-buying to a strengthening job market.
The Fed is currently buying $45 billion in long-term Treasurys and $40 billion of mortgage-backed securities each month—part of an effort to boost the economy by driving down long-term interest rates to encourage more borrowing, spending and hiring.
Mr. Dudley, one of the chief advocates of the bond-buying programs, appeared decisively in favor of tapering off purchases in the future. “At some point, I expect that I will see sufficient evidence of economic momentum to cause me to favor gradually dialing back the pace of asset purchases,” he said, speaking to the Economic Club of New York.
Echoing Mr. Bernanke, he said the Fed could dial purchases back up if economic conditions worsened. Mr. Dudley stressed the labor market and broader economy are still not healthy enough to begin scaling back the bond buying…..”
If you enjoy the content at iBankCoin, please follow us on Twitter
