Plosser says Fed should start tapering asset buys in June

MILAN Thu May 16, 2013 8:03am EDT

MILAN (Reuters) - The Federal Reserve should reduce asset purchases from next month given the U.S. economy's brighter prospects, a senior official of the central bank said on Thursday.

"Things are better enough for the Fed to slow the pace of purchasing, if we are really serious about the fact that (the purchase program) is scaleable," Philadelphia Fed President Charles Plosser said.

Plosser, a hawk who does not have a vote on policy this year, said he did not have a strong view on how much the program should be tapered.

Most economists do not expect the Fed to reduce its $85 billion in monthly bond buys as soon as June's policy meeting, given the still high U.S. unemployment rate and weak inflation.

Plosser said he did not think the Fed's quantitative easing program was destabilizing markets.

"The Fed has been very cautious on not disrupting the market functioning," he said, speaking on the sidelines of a conference in Italy hosted by the Global Interdependence Center.

Eric Rosengren, president of the Boston Federal Reserve Bank and considered a dove, earlier said in prepared remarks to the same conference that highly accommodative monetary policy was still needed despite the stronger economy and some improvement in the U.S. labor market.

(Reporting By Francesca Landini, editing by Silvia Aloisi, John Stonestreet)

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