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The Fed’s Williams suggests that even slower employment growth could start a taper in bond purchases.

John C. Williams, president of the Federal Reserve Bank of New York and strong monetary policy official, suggested on Wednesday that the central bank could begin to withdraw its support for the economy by the end of the year. The employment market will grow at a slower pace in the coming months.

Federal Reserve Board Buying $ 120 Billion in Government-Supported Bonds Every month, we support the economy by maintaining low interest rates and the flow of funds. Policy makers have been discussing when to start delaying the program.they Said in december They do so only when they have made “substantial further progress” towards maximum employment and inflation, which averages 2 percent over time.

Key policy makers have revealed that the inflationary side of that target is being met. Price increase significantly this year, But they were waiting for further progress in employment. Employment market valuations are complicated by the proliferation of coronavirus infections associated with delta variants. August salary rise slows..

Williams, who constantly votes for monetary policy and is the most important of the central bank’s 12 regional policy makers, told reporters Wednesday that he was looking at cumulative employment progress rather than monthly changes. rice field. Weakening employment growth does not necessarily make it impossible to start a so-called taper.

“It’s not a speed condition,” Williams said. “It really is where we are on this road back to maximum employment.”

He added that he is considering measures such as labor force participation to get a “big picture” of how much the employment market has progressed, as well as increasing employment.

“Some months can be strong, and sometimes not so strong,” Williams said. “It’s really about accumulation.”

“We have to wait for the data to arrive,” he added.

“It may be appropriate to start slowing down asset purchases this year,” Williams said in a speech earlier that day if the economy continues to improve as expected. Withdrawal of bond purchases is only the first step in removing support, and the Fed’s policy rate is expected to remain near zero for some time.

His comments came in the same way that the Fed published the latest case study of business contacts across the region’s districts.Beige book.. “Delta” was mentioned 32 times as employers reported that “growth shifted down to a slightly slower pace from early July to August.”

The Fed’s Williams suggests that even slower employment growth could start a taper in bond purchases.

Source link The Fed’s Williams suggests that even slower employment growth could start a taper in bond purchases.

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