Fed hawks circle before Powell speech as they push for bond taper
The U.S. Federal Reserve’s hawkish wing used the day before a marquee speech by Fed Chair Jerome Powell to urge the central bank to begin paring bond purchases they feel have become ineffective, it not downright harmful.
· Bullard says the Fed has to ‘get going’ on the taper, may need to get aggressive to stop inflation
St. Louis Federal Reserve President James Bullard said Thursday that the central bank should begin curbing its monthly stimulus efforts soon and have the process wrapped up by the end of March to prevent the U.S. economy from overheating.
Many Fed leaders believe the central bank should reduce the pace of its monthly purchases of $120 billion in Treasury bonds and mortgage-backed securities in a process known as tapering.
· Esther George, president of the Kansas City Fed, told CNBC Thursday morning that “given the progress we’ve seen,” Fed tapering is “appropriate,” though she didn’t specify when she thinks it should start.
· Fed's Kaplan: don't see anything to change '22 rates liftoff view
Dallas Federal Reserve President Robert Kaplan suggested on Thursday that he continues to expect the Fed to start raising interest rates next year, after what he hopes to be an eight-month-long process of phasing out its monthly asset purchases, starting in October.
“I don’t see anything that is likely to change my submission materially,” he told Yahoo Finance, referring to the economic projections he and other Fed policymakers submit each quarter, most recently in June when he penciled in an expectation for a 2022 start to Fed interest rate hikes.
A new round of projections are due next month.
“Acting sooner on asset purchases may give us the ability to be more flexible and patient on the fed funds rate down the road.”
· Fed's Powell likely to give few hints on bond-buying taper timeline
Federal Reserve Chair Jerome Powell’s highly anticipated speech to the Jackson Hole economic conference on Friday will likely offer few new hints about when the U.S. central bank may start reducing its massive asset purchases, analysts said.
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