New York Fed’s John Williams: US Economy “A Long Way” From Reducing Asset Purchases
New York Federal Reserve Chairman John Williams said Thursday he would like to see the US economy grow further before the central bank withdraws its aggressive monetary stimulus.
“We’re still a long way from sustaining the substantial progress we’re really looking for in terms of adjustments to our asset purchase program,” Williams told Yahoo Finance in an exclusive interview.
But Williams added that the Fed should start paying attention to how the data looks in the coming months.
“We have to think about the future, plan ahead, so I think it makes sense that we think about the different options we might have in the future,” said Williams.
In recent weeks, other Fed policymakers have said they would like to take the first steps towards slowing the pace of central bank quantitative easing, a program that is currently absorbing around $ 120 billion a month in government bonds. US Treasury and agency mortgage-backed securities.
Philadelphia Fed Chairman Patrick Harker said on Wednesday that “it might be time to at least think about scaling back the Fed’s asset purchase program. Dallas Fed Chairman Robert Kaplan and Fed Governor Randal Quarles are among other Fed officials who have also expressed interest in having discussions on the cut as soon as possible.
Inflation is already on the rise. The basic personal consumption expenditure (PCE) price index, which excludes food and energy, rose 3.1%, the index’s biggest jump since 1992.
Williams said supply chain issues and shortages were behind the higher inflation readings, adding that he expects these factors to be “sorted out over the next few months and quarters.” .
He pointed to the cropped average inflation readings of the Dallas Fed and the Cleveland Fed, alternative measures that attempt to lower the economy’s underlying inflation rates.
The rebound is comparatively slower in the labor market, where there are 8 million fewer workers than pre-pandemic levels.
The Labor Department is expected to release employment data for May on Friday morning. Williams said he hoped to see a “strong” report, but said achieving peak employment will take more than a month of bullish data.
Still, Williams said he was “very positive” about the economic outlook.
“I expect the economy to adjust to the rapid recovery and we are going to see very good job growth and we expect to see very strong GDP growth this year and good growth year round. next, ”Williams said.
Williams and his colleagues on the Federal Open Market Committee (FOMC) will go into their usual “blackout,” the period of about a week and a half before a policy meeting in which Fed officials do not make public remarks.
The next central bank policy announcement is expected on June 16.
Source: Yahoo Finance