Daily Management Review

Fed officials hint at near move to wind down stimulus program


Three U.S. Federal Reserve officials said in three separate TV interviews on Thursday that the moment to move to wind down the central bank's stimulus through bond purchases is approaching.

With inflation surging to unexpectedly high levels and uncertainty about the prospects of a slowdown next year, "the stimulus phase-out should be underway and completed by the end of the first quarter of next year," said James Bullard, president of the Federal Reserve Bank of St. Louis, speaking on CNBC. 

Bullard shared his opinion on when to end the stimulus program, under which the Fed buys $120 billion worth of bonds each month.

The Fed has already signaled that the economy has improved enough that asset purchases can be cut. The Fed's Open Market Committee noted that the process could begin as early as this year, which is broadly in line with financial market expectations.

Bullard noted that when the bond-buying process is complete, it will be possible to assess the situation and then see how much inflation has slowed. "If it doesn't slow down, we'll have to be more aggressive," he said, referring to the use of monetary policy tools to curb inflation.

On Friday, central bank Chairman Jerome Powell will speak at the Fed-Kansas City conference. His talk will focus on the economic outlook. Regional bank presidents are expected to speak in televised interviews.

source: wsj.com