Fed's No. 2 Official Sees Time Approaching for Discussion on Cutting Asset Purchases
A top Federal Reserve official said he expects to begin discussing a reduction in the central bank's massive asset purchases at a coming policy meeting, while stressing the need to closely monitor economic data. "There will come a time in coming meetings, we'll be at the point where we can begin to discuss scaling back the pace of asset purchases," Fed Vice Chairman Richard Clarida said in an interview on Yahoo Finance. "It's going to depend on the flow of data that we get."
Since last June, the Fed has been buying $80 billion of Treasury debt and $40 billion of mortgage-backed securities each month to hold down long-term borrowing costs. The policy, also known as quantitative easing, provides the economy with support beyond the near-zero overnight interest rates the Fed has maintained since March 2020. Minutes from the Fed's most recent policy meeting, on April 27-28, showed "a number of participants" called for a discussion of the asset purchases "at some point in coming meetings," assuming the economy continues to recover swiftly. Mr. Clarida said he has a "very, very positive" outlook for the U.S. economy and that he expects the labor market to begin recovering faster after hiring unexpectedly slowed in April.