Fed's Williams: It could be appropriate to start taper this year
Comments from the NY Fed President:
- Assuming the economy continues to improve as anticipated, it could be appropriate to start reducing the pace of asset purchases this year
- Even after the asset purchases end, the stance of monetary policy will continue to support recovery
- Wants to see more improvement in labor market before he is ready to say substantial further progress standard has been met
- There are indications that the spread of the delta variant is weighing on consumer spending and jobs
- Expects real GDP to increase by around 6% this year
- Expects inflation to come back down to 2% next year
- Pace of growth appears to be slowing somewhat relative to the first half
- We have a long way to go to get back to maximum employment
- it's clear that this spike in inflation largely reflects the transitory effects of the rapid reopening of the economy, which is pushing supply and demand in extreme ways.
Williams is a core FOMC member and I think this offers a good preview of what the FOMC and Powell are going to say this month. They want to see the October jobs report before starting the taper.