Nick Timiraos at The Wall Street Journal writes that Federal Reserve officials are nearing an agreement to begin scaling back their asset purchases in about three months if the economic recovery continues… (Wall Street Journal)
At their July 27-28 meeting, officials deliberated on two important questions: when to start paring their monthly purchases and how quickly to reduce, or taper, them.
NOTABLE OPINIONS:
- Boston Fed President Eric Rosengren said in an interview he expects to see enough job growth to meet the criteria for reducing bond purchases by September. “That would set up some time this fall a possible tapering that is dependent on the Delta variant and other variants not slowing down the labor market substantially,”
- Rosengren also specifically addressed his concern with MBS purchases, “If you can’t get housing materials and you can’t get construction workers to come back on site, but we do increase demand for housing, then it doesn’t do much for our employment mandate—but it does increase housing prices more than it otherwise would,”
- St. Louis Fed President James Bullard said he wants to start paring assets in October and conclude the program by March. He argued that would give the Fed more flexibility going forward. “I don’t want to have to move too rapidly [to raise rates] because it can be very disruptive, so I think that the pace I’m suggesting would give us a lot more optionality in 2022 if we needed to use it.”