Two Federal Reserve officials said that the day for the U.S. central bank to pull back on bond buying is growing closer.
Robert Kaplan of the Dallas Fed and James Bullard of the St. Louis Fed didn’t specify when the central bank should act in a joint virtual appearance Monday, but both said the time for the central bank to rethink its strong support for the economy is getting closer, if it hasn’t already arrived.
Mr. Kaplan, reiterating a view he has held for some time, said it would be better for the central bank to pare back sooner rather than later its bond-buying stimulus, and that easing back on aid now reduced the risk of a more abrupt shift in policy down the road. Meanwhile, Mr. Bullard said that the debate is open and he thinks it is appropriate for officials to weigh the outlook for their asset purchases.
At a Federal Open Market Committee meeting last week, Fed officials held their short-term interest-rate target at near zero, where it has been since March 2020, and pressed forward with monthly purchases of $80 billion in Treasurys and $40 billion mortgage bonds.
But even as it maintained its policy stance, the central bank, heartened by a rapid economic recovery and seeing a rise in inflation, moved forward the timing of when it expects to raise rates, penciling in two increases in 2023. It also acknowledged opening the door to pulling back on its bond-buying stimulus.
