The US central bank could begin to reduce the amount of assets it buys each month as early as October, if the improvement in the job market is confirmed, one of the institution's governors said on Monday.
Read also: United States: the Fed welcomes the progress of the economy, but does not announce monetary tightening
The Federal Reserve (Fed) continues to want to see signs of
"significant progress"
before reducing its support for the economy, Christopher Waller said in an interview with CNBC, repeating the mantra that has prevailed for several months among central bank officials. But the United States economy has recovered well, he believes: the total amount of gross domestic product (GDP) has returned to its pre-pandemic level, the unemployment rate has fallen below 6% , inflation exceeds the Fed's 2% target.
"If we have between 800,000 and 1 million job creations in the next two official reports (...) then we will have regained about 85% of the jobs lost by early September"
, said the official, a Fed governor who participates in the Monetary Policy Committee (FOMC).
"This is significant progress and I think we could be ready to make an announcement in September"
on a reduction in asset purchases made every month by the Fed, said Christophe Waller.
"We should start soon and at a fairly rapid pace so that we can start raising rates in 2022, if we have to do so,"
he also said.
In view of the good health of the economy,
"there is no reason to go slowly and drag out the reduction in asset purchases
,
"
said the official.
To fuel the recovery, the Fed has kept its key rates in a range of 0 to 0.25% for more than a year and is acquiring $ 120 billion in treasury bills and mortgage-backed securities each month.
The institution has not yet announced when it plans to ease off on these support measures.
Propagation of the Delta variant
The spread of the Delta variant, which has resumed cases of Covid-19 in many regions of the world, should not unduly threaten American growth, also estimated Christophe Waller.
Hospitalizations linked to Covid-19 reached a peak in December 2020 in the United States, which did not prevent the country from recording growth of 6.4% in the first quarter at an annualized rate, he said. underline.
As for inflation, it should
"slow down by the end of the year and some of the price increases that accompanied the reopening of the economy will subside,"
predicted the Fed governor.
