The Federal Reserve may have to accelerate the pace of tapering to take into account the economic pickup currently ongoing in the U.S. and the improving forecast for the near future, Federal Reserve Bank of Philadelphia President Charles Plosser said.
"We must back away from increasing the degree of policy accommodation in a manner commensurate with an improving economy," Mr. Plosser told a panel in Paris. "Reducing the pace of asset purchases in measured steps is moving in the right direction, but the pace may leave us well behind the curve if the economy continues to play out according to the FOMC forecasts."
Based on the latest gross domestic product numbers, the U.S. economy accelerated its pace of expansion in the second half of 2013 from the first half. Real output showed growth of 3.3% from 1.8% in the first half.
As the economic outlook improves, the Fed announced in January its second cut to its monthly purchase program to $65 billion. At the current pace, the FOMC will end the purchase program later this year.
Fed’s Plosser wants more aggressive tapering as economy continues to improve
March 11, 2014 by Leave a Comment