Fed's Lacker says exit from bond-buying programme should be quick

BERLIN, July 27 Sat Jul 27, 2013 3:07am EDT

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BERLIN, July 27 (Reuters) - The U.S. central bank should stop its bond-buying quickly and an end to the programme was "in sight", a senior Federal Reserve official said in an interview with a German magazine on Saturday.

Richmond Fed President Jeffrey Lacker, one of the Fed's most fiscally conservative officials, said he expected ending the process to be successful, according to WirtschaftsWoche.

"We must make our exit from the bond-buying programme quick," Lacker was quoted as saying by the German magazine.

"An end to these bond purchases came into sight at the latest Fed meeting," he said.

Fed Chairman Ben Bernanke jolted markets in late May by saying the U.S. central bank planned to ease back on its stimulus efforts once the economy improves.

Under the plan Bernanke laid out on June 19, the Fed is likely to reduce its monthly bond buys later this year and halt them altogether by mid-2014, as long as the economic recovery unfolds as expected.

Lacker pointed to relatively low inflation and said a faster-than-expected fall in the U.S. jobless rate was sufficient to start winding down the purchasing programme.

"First of all we should end the monthly purchases of mortgage bonds as quickly as possible," he said. The magazine said Lacker hoped this would force the U.S. Congress to agree more quickly on reducing debt.

"We need a sustainable solution and the sooner the better," he said.

Lacker said more needed to be done on drawing up rules to avoid future government rescues for struggling banks and said the stress tests conducted in the United States were a step in the right direction.

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