Note

UPDATE 1-Fed's Kaplan hopes to begin QE weaning this year

Verified Media
· Views 35

(Adds comments on QE)

Jan 11 (Reuters) - Dallas Federal Reserve President Robert Kaplan on Monday said he expects broad vaccine distribution to unleash strong economic growth later this year, allowing the U.S. central bank to begin to pull back on some of its extraordinary monetary support.

“We should be as aggressive as we can be while we are in the teeth of this pandemic, until we are convinced that we have weathered this pandemic,” Kaplan said in a virtual town hall event. But “later this year, my own view is, we should at least be having an earnest discussion about when it’s appropriate to taper” the Fed’s asset purchase program.

The central bank is currently buying U.S. Treasuries and mortgage-backed securities at a pace of $120 billion a month, and has pledged to continue quantitative easing at that same pace until the economy has made “substantial” further progress toward the Fed’s goals of full employment and stable prices.

The economy faces a few challenging months ahead as the virus surge continues, Kaplan said, but for the year as a whole gross domestic product (GDP) is likely to grow about 5% and unemployment to fall to about 4.5% or 4.75% from its current level of 6.7%.

If that forecast proves correct, Kaplan said Monday, he expects the economy “will have made substantial progress” toward the Fed’s employment and inflation goals, meeting the bar for reducing its bond-buying program.

“I think it’s a healthier for the U.S. economy and for markets to wean off these extraordinary actions and this extraordinary stimulus,” he said. (Reporting by Ann Saphir; Editing by Leslie Adler and Kim Coghill)

Our Standards: The Thomson Reuters Trust Principles.

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

No comment on record. Start new comment.