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Dallas Fed President Robert Kaplan said Wednesday he expects to advocate that the Fed announce a plan to slow down its $120 billion per month of asset purchases “sooner rather than later,” despite the disappointing August jobs report.
Kaplan, who has been a leading advocate for the tapering, said he wasn’t surprised by the August jobs report.
“I will be watching very carefully how the economy is unfolding between now and our Sept. 22 meeting. As I see it now, I don’t see see a fundamental change in the outlook. If I get to the meeting, and continue to feel that way, I’d be advocating that we should announce a plan for adjusting these purchases in the September meeting and begin shortly thereafter, maybe in October,” Kaplan said during a town hall sponsored by his regional Fed bank.
The Fed has been buying $80 billion in Treasurys and $40 billion in mortgage-backed securities each month for more than a year in order to keep long-term rates low and to support consumer demand.
Fed officials have been talking about slowing down the purchases since July. Many economists thought the Fed might announce a plan in September, but the weak jobs numbers caused many to predict a delay until later in the year.
Kaplan said the weak jobs report was partly due to the delta variant of the coronavirus, which is having an impact on leisure sectors and slowing growth in the third quarter. He said there might be another weak report in September, but that the economy should recover in the October-December quarter.
“The economy is continuing to recover, but in fits and starts, and we’re in the middle of one of those fits right now,” Kaplan said.
Earlier Wednesday, New York Fed President John Williams said he wanted to see more jobs data before he would support a tapering. He said tapering could still start this year.
Meanwhile, St. Louis Fed President James Bullard told the Financial Times he is pushing for a quick taper.
During the town hall, Kaplan didn’t discuss a Wall Street Journal report on his latest financial disclosure form that showed he made “multiple” stock trades last year that were each valued at more than $1 million.
Stocks
SPX,
DJIA,
closed lower on Wednesday on the talk of tapering.
