Clarida says Fed bond purchases will keep pace for the rest of the year

Federal Reserve Vice Chairman Richard Clarida has said he expects the central bank to keep pace with its asset purchases until the 2021 balance.

“My economic outlook is consistent with the fact that we are maintaining the current pace of purchasing for the rest of the year,” he told the Council on Foreign Relations in a presentation Friday.

As it stands, the Fed buys at least $ 120 billion per month, split between a minimum of $ 80 billion in treasury bills and $ 40 billion in mortgage-backed securities. The pace of purchasing accelerated during the Covid-19 pandemic as an ongoing effort to both keep the economy growing and the market functioning.

Markets are wondering how long the Fed will continue with the program given that its holdings have now eclipsed $ 7 trillion.

Clarida said on Friday he did not see a decline this year even though he expects growth to accelerate.

“I think it might be some time before we think about reducing the pace of our purchases the way I look at the data, and I’m relatively optimistic about the economic outlook,” he added. in a session hosted by CNBC’s Steve Liesman. . “We want further progress in the labor market and get closer to our inflation target of 2%, and I think it’s a long way before we declare victory on this point.”

While the Fed will keep its options open as the economy progresses throughout the year, Clarida said officials are determined to meet and likely exceed their inflation target, as well as full employment. inclusive.

Following the December meeting, the Fed pledged to maintain the asset purchase program until substantial progress has been made in fulfilling the mandate. Earlier this week, Atlanta Fed Chairman Raphael Bostic said he wouldn’t be surprised if the pace of bond buying slows by the end of the year.

“Right now, I think I expect to maintain the current pace of buying for the rest of the year,” Clarida said.