The economy is on track to later this year satisfy the Federal Reserve’s threshold to begin reducing its $120 billion in monthly asset purchases, a top central bank official said Tuesday.
Chicago Fed President Charles Evans said he expected recent employment gains to continue, which would allow the Fed to declare that the economy has achieved the “substantial further progress” it laid out last December.
“I’d like to see a few more employment reports” before making that determination, Mr. Evans told reporters during an online news conference. “We’re coming upon a time where it’s definitely going to be appropriate to start” reducing the pace of asset purchases.
“There’s a sense in which you want to be careful that you don’t start prematurely [and] you don’t start too late,” said Mr. Evans, who is a voting member of the rate-setting Federal Open Market Committee this year.
Mr. Evans said he expects the unemployment rate to fall to 4.5% by year’s end and the Fed’s preferred inflation gauge, excluding volatile food and energy categories, to end the year around or slightly above 3%. That gauge hit 3.5% in June, its highest level in three decades amid supply-chain bottlenecks associated with reopening the economy.
