Kansas City Federal Reserve President Esther George on Wednesday said the time had come to end the central bank’s bond-buying program.
The central bank has been purchasing $120 billion per month in Treasurys and mortgage related bonds to keep interest rates low and spur demand.
The central bank said last winter that it would continue the bond buying until the economy has made “substantial” progress on its goals of a strong economy.
“With the recovery underway, a transition from extraordinary monetary policy accommodation to more neutral settings must follow,” George said, in a speech a virtual conference sponsored by the National Association of Business Economics.
“The time has come to dial back the settings,” she added.
While much of the current spike in inflation is the result of special factors, there are signs of continued strong demand, the labor market is recovering and inflation expectations are firm, she said.
“I support bringing asset purchases to an end under these conditions,” George said.
George, a relative hawkish member of the Fed, will be a voting member of the Fed’s interest-rate committee next year.
A debate has broken out at the Fed on how soon the central bank might announce a plan to slow down asset purchases and then start the process.
Several Fed officials want the announcement in September with a start of the slowdown occurring perhaps as soon as November. Others, like Chicago Fed President Charles Evans, are backing an announcement later this year that would have the slowdown of bond-buying potentially begin early next year.
U.S. stocks were trading higher Wednesday as core CPI came in below expectations. The Dow Jones Industrial Average
was trading at an intra-day record, up 166 points to 35,431.