Washington, November 20, : , Christopher Waller, Governor of the US Federal Reserve, has asked the bank to accelerate the pace at which it reduces asset purchases to combat rising inflation.Waller stated in prepared remarks at the Center for Financial Stability, New York, that the inflation data were starting to look more like a snowfall.
He said, in reference to Fed’s policy-making board: “The timing for any policy action will be a decision by the FOMC (Federal Open Market Committee), but my part has been influenced by the rapid improvement of the labor market data and the deteriorating inflation statistics.I favor a quicker pace of tapering as well as a rapid removal of accommodations in 2022.”
Waller argued that monetary policy doesn’t need to react to price pressures caused by supply constraints.
He stated that all shocks are temporary and fade away eventually.According to this logic, although the Fed shouldn’t respond to shocks at all, it does sometimes, as it should.”
James Bullard (President of the Federal Reserve Bank of St.Louis) also supported Tuesday’s call for a faster pace in tapering asset purchases.
Bullard stated that “We could accelerate — we retained optionality on it that we could speed-up the taper when it is appropriate.” He also said that Bullard had suggested that asset purchases would be stopped at the close of the first quarter 2022.
This week, the Fed started to cut its $120 billion monthly asset purchasing program by $15 billion.
In mid-December, the central bank will cut its monthly asset purchases by $15 billion.This pace would see the tapering complete in June 2022.
Jason Furman was a former chairman of the White House Council of Economic Advisers, and he is now a senior fellow at Peterson Institute for International Economics.He urged Fed officials to speed up their taper, which should begin around January 2022, with the goal of ending asset purchase by March 2022.
Furman stated that this would indicate both that the policy isn’t becoming more accommodative, and would allow for greater room to increase rates earlier,” Furman said in a recent analysis.Furman noted that current US monetary policies are “more accommodating” due to rising inflation.
According to the US Labor Department, October’s consumer price index (CPI), rose 6.2% from one year ago.This is the largest annual increase in over 30 years.
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