The U.S. economic recovery may have strengthened enough for the Federal Reserve to begin winding down its bond purchases by as early as this summer, a top official from the central bank said Wednesday.
While he cautioned that more concrete evidence is needed to confirm that the latest series of encouraging economic data are more than a "blip," San Francisco Federal Reserve Bank President John Williams said it may be possible for the bank to completely end its bond-buying program by the end of 2013.
"I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer," Mr. Williams said Wednesday in a speech in Los Angeles, according to a copy of his speech obtained beforehand. "If that happens, we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year."
The Fed announced last year that it would begin buying $85 billion of Treasury and mortgage-backed securities every month, and pledged to maintain the program until the outlook for the job market improved. The bond buying is designed to keep interest rates low and spur businesses and consumers to spend and invest, supporting the job market.
Mr. Williams, who isn't currently a voting member of the policy-setting Federal Open Market Committee, said that while the U.S. continues to face headwinds from a weak global economy and austerity measures being implemented by federal, state and local governments, the outlook has improved in recent months, especially in the housing and automobile sectors.
He said that the U.S. economy will likely expand 2.5% this year and 3.25% in 2014, and that unemployment will likely fall below 7% in late 2014 and below 6.5% in the middle of 2015.
Write to Matthew Walter at matthew.walter@dowjones.com
While he cautioned that more concrete evidence is needed to confirm that the latest series of encouraging economic data are more than a "blip," San Francisco Federal Reserve Bank President John Williams said it may be possible for the bank to completely end its bond-buying program by the end of 2013.
"I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer," Mr. Williams said Wednesday in a speech in Los Angeles, according to a copy of his speech obtained beforehand. "If that happens, we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year."
The Fed announced last year that it would begin buying $85 billion of Treasury and mortgage-backed securities every month, and pledged to maintain the program until the outlook for the job market improved. The bond buying is designed to keep interest rates low and spur businesses and consumers to spend and invest, supporting the job market.
Mr. Williams, who isn't currently a voting member of the policy-setting Federal Open Market Committee, said that while the U.S. continues to face headwinds from a weak global economy and austerity measures being implemented by federal, state and local governments, the outlook has improved in recent months, especially in the housing and automobile sectors.
He said that the U.S. economy will likely expand 2.5% this year and 3.25% in 2014, and that unemployment will likely fall below 7% in late 2014 and below 6.5% in the middle of 2015.
Write to Matthew Walter at matthew.walter@dowjones.com
