Officials from the Federal Reserve banks of Atlanta, San Francisco and St. Louis said they believe the U.S. economy is performing strongly enough that the central bank will be able to stick to its plan to wind down quantitative easing this year, Reuters reported Feb. 19.
The Fed’s most recent policymaking meeting notes indicate that only a major change in the economic outlook would lead the regulatory agency to scuttle plans to reduce its massive monthly bond buying program.
Some Fed policymakers are calling for cuts to the asset-purchase program in $10 billion increments, according to Jan. 28-29 meeting notes, Reuters reported. At that meeting, policymakers decided to reduce bond-buying to $65 billion per month. They made the move despite a weaker than desired job market.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, went so far as to note that the Fed likely would end bond-buying completely by the fourth quarter, Reuters reported.
New Fed Chair Janet Yellen will run her first policy-setting meeting March 18-19.
The Fed has promised to keep interest rates near zero until well after the unemployment rate has dropped below 6.5 percent, especially if inflation remains below 2 percent. Currently, unemployment stands at 6.6 percent and inflation stands slightly over 1 percent.
Some Fed policymakers are concerned that continued bond-buying poses risks to the country’s financial stability.
Wall Street economists have said they expect the central bank to keep rates near zero until at least the third quarter of 2015. However, any forward guidance the Fed releases could spark turmoil in bond markets, Reuters reported.
January’s policy meeting was the first without dissents on Fed policy, emphasizing how “tumultuous” Bernanke’s tenure as chair has been, Reuters reported.