Several Federal Reserve policymakers on Wednesday signaled that the U.S. central bank remains on track to trimming its massive asset purchases this year, despite the slowdown in jobs growth seen in August and the impact of the recent COVID-19 resurgence.
"The big picture is that the taper will get going this year and will end sometime by the first half of next year," said St. Louis Fed Bank President James Bullard in an interview with theBullard dismissed concerns that the labor market recovery was faltering after the U.S. economy in August created the fewest jobs in seven months. He said the labor market could be "very strong" going into next year if the fight against the pandemic continues to improve.
The Fed has promised to keep purchasing Treasury securities and mortgage-backed securities at the current pace of $120 billion a month until there is "substantial further progress" toward their goals for inflation and maximum employment.New York Fed Bank President John Williams said on Wednesday he felt the standard was met for inflation, but he would like to see further improvement in the labor market before declaring substantial further progress toward the Fed's employment goals.
Williams said he is more focused on job gains over time than month to month. He said he will look at a range of indicators including the employment-to-population ratio and the labor force participation rate, for insight on labor market strength. The Delta variant's spread is starting to pressure consumer spending and jobs growth, Williams said. He expects the U.S. economy to grow by about 6% this year after adjusting for inflation, which he sees moderating next year to about 2%.
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