Clarida says shopping for Fed bonds to maintain up with the remainder of the 12 months
Scott Mlyn | CNBC
Richard Clarida, vice chairman of the US Federal Reserve, said he expected the central bank to maintain the pace of its asset purchases through the 2021 balance.
“My economic outlook is consistent with keeping the current shopping pace for the rest of the year,” he told the Foreign Relations Council during a presentation on Friday.
From today’s perspective, the Fed buys at least $ 120 billion a month, split between at least $ 80 billion in treasuries and $ 40 billion in mortgage-backed securities. The pace of buying has accelerated as a result of the Covid-19 pandemic to keep both economic growth and the functioning of the market going.
Markets have wondered how long the Fed will keep the program going, as its holdings have now dwarfed $ 7 trillion.
Clarida said Friday he doesn’t see a retreat at any point this year, despite expecting growth to accelerate.
“I think it might be some time before we start thinking about slowing down the pace of our purchases the way I look at the data and I’m relatively optimistic about the economic outlook,” he added in one of Steve Liesman’s CNBC moderated session added. “We want further progress in the labor market and towards our 2% inflation target, and I think that is a long way off before we declare victory on this.”
While the Fed will keep its options open as the economy moves forward during the year, Clarida says officials are determined to meet and likely exceed its inflation target, as well as full, inclusive employment.
After the December meeting, the Fed pledged to continue the asset purchase program until substantial progress was made towards the mandate. Earlier this week, Atlanta Fed President Raphael Bostic said he wouldn’t be surprised if the pace of bond buying slows down by the end of the year.
“At the moment, I think my expectation is to maintain the current shopping pace later this year,” said Clarida.