The Federal Reserve might soon begin tapering its asset purchases as employment numbers continue to improve, but evolving risks, such as the spread of the delta variant of the coronavirus, could play a factor in the timing, Chairman Jerome Powell said Friday.
At the Federal Open Market Committee's July meeting, "I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year," Mr. Powell said during a speech at the at the Fed's annual Jackson Hole, Wyo., policy forum. "The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the delta variant. We will be carefully assessing incoming data and the evolving risks."
For now, the Fed will continue its bond purchases — currently $120 billion a month split between $80 billion in Treasury securities and $40 billion of mortgage-backed debt — Mr. Powell said.
He noted that the "timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff." The Fed has kept its key interest rate near zero since the early days of the COVID-19 pandemic.