CHICAGO May 20 The U.S. Federal Reserve could keep up its current level of bond-buying stimulus, but could end it abruptly in the autumn if by then it was sure that the labor market was on a solid footing, a top Fed official said on Monday.
The Fed is buying $85 billion in Treasuries and mortgage-backed securities each month in a bid to push down borrowing costs, and has said it will continue purchases until it sees a substantial improvement in the labor market outlook.
"We have seen really quite a lot of improvement," Chicago Fed President Charles Evans told reporters after speaking to the CFA Society Chicago, noting that U.S. employers had added an average of over 200,000 jobs each month for the last six months. "I think at the moment the key issue is whether or not it is extremely likely that this is going to be maintained over the next few months."
Some Fed officials have said the U.S. central bank should start reducing the bond buying to reflect this improvement in the labor market.
Evans said he was "open-minded" to that approach, if he were confident the improvements could be sustained. But he said the Fed does not necessarily need to wean the market gradually from the bond-buying program.
"Another approach, which doesn't get talked about that much, we could continue to go with $85 billion a month until we decide that absolutely we've seen enough improvement, and then bring it to a quick conclusion at that time," he said. "That would be a program going into the fall, I would think, because you can't really have that much confidence to bring it to an end."