US Fed Chief says appropriate to consider wrapping up taper a few months sooner

Washington, Dec 1 (SocialNews.XYZ) US Federal Reserve Chairman, Jerome Powell has said that it is appropriate to consider wrapping up the central bank's taper of asset purchases "a few months sooner" amid inflation pressures.

"The economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases ... perhaps a few months sooner," Powell on Tuesday told lawmakers at a hearing before the Senate Banking Committee.

"I expect that we will discuss that at our upcoming meeting," he said, referring to the Fed's policy meeting on December 14-15.

The Fed in November began to reduce its monthly asset purchase program of $120 billion by $15 billion. At this pace, the Fed would end its asset purchases by June 2022, Xinhua news agency reported.

While Fed officials generally supported the plan to reduce asset purchases by $15 billion a month, some Fed officials wanted a faster pace to give the central bank leeway to raise rates sooner, according to the minutes of the Fed's November policy meeting released last week.

Fed Governor Christopher Waller has recently urged the central bank to speed up the pace of tapering asset purchases in response to the surging inflation.

"The rapid improvement in the labor market and the deteriorating inflation data have pushed me towards favouring a faster pace of tapering and a more rapid removal of accommodation in 2022," Waller said.

The consumer price index (CPI) rose 6.2 per cent in October from 2020, the strongest annual gain in more than 30 years, according to the US Labor Department.

Powell also added that the recent rise in Covid-19 cases and the emergence of the Omicron variant pose downside risks to US employment and economic activity and increased uncertainty for inflation.

"Greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions," he said.

Source: IANS