By Jonnelle Marte
Jun 2 (Reuters) – As the US economy continues to rebound from the health crisis and the job market rebounds, it may be time for officials at the Federal Reserve to start thinking about the best way to slow down their purchases. of assets, Philadelphia Fed Bank President Patrick Harker said Wednesday.
“We plan to keep the federal funds interest rate low for a long time,” Harker said in remarks prepared for a virtual event. “But it may be time to at least think about reducing our $ 120 billion monthly purchases of Treasuries and mortgage-backed securities.”
Harker said the Fed will not move suddenly when it begins to slow down on purchases, which increased last year in an effort to stabilize markets and support the economy after it was hit by the pandemic.
“We will withdraw the stimulus carefully and methodically as the economy continues to strengthen,” he said. “Our goal is to be boring.”
Fed officials agreed at their last meeting to keep bond buying at the current rate until there is further substantial progress toward the central bank’s targets for inflation and maximum employment.
Several policy makers have recently acknowledged that they are closer to discussing when to cut back on some of those purchases. The Fed’s next monetary policy meeting will take place on June 15-16.
Harker said he expects the US economy to grow 7% this year and at a slower pace of around 3% in 2022.
The monetary officer said he expects job creation to pick up in the coming months and that the job market could return to pre-pandemic trends next summer.
The Fed has said it does not plan to raise rates until the economy returns to full employment and inflation reaches its 2% target.
(Report by Jonnelle Marte; Edited in Spanish by Javier López de Lérida)