Fed Official Says Time to Taper Bond Buying ‘Soon’

Source: Federal Reserve Bank of Philadelphia

Federal Reserve Bank of Philadelphia President and Chief Executive Officer Patrick Harker believes it may soon be time to cut down on the Fed’s bond-buying program. DXY is up 0.31%.

• Harker said it would soon be time to slowly and methodically “frankly boringly” cut down on the $120-billion monthly bond-buying program.
• The Fed official said that bond purchases are not doing much to address labor force issues, but it was earlier necessary to keep markets functioning.
• Following the asset purchases, Harker said the Fed could then consider raising federal funds rates, but this is unlikely until late 2022 or early 2023.
• Harker expects inflation around 4% this year before easing to just over 2% in 2022, with moderation already being seen amid the stabilization of used car prices.
• Downside risks include the continued supply chain constraints and the resurgence of the virus, as well as the failure of Congress to raise the debt ceiling.
• The official predicts GDP growth to come in around 6.5% this year, before moderating to about 3.5% in 2022 and 2.5% in 2023.