BERLIN, July 27 The U.S. central bank must end
its bond-buying programme quickly and an end to the programme
was "in sight", a senior Federal Reserve official said in a
German magazine on Saturday.
Fed Chairman Ben Bernanke jolted markets in late May with
plans to ease back on stimulus efforts once the economy
improves. The Fed is likely to reduce its monthly bond purchases
later this year and stop them altogether by mid-2014, as long as
the economic recovery unfolds as expected, Bernanke has said.
"We must make our exit from the bond-buying programme
quick," Richmond Fed President Jeffrey Lacker, one of the Fed's
most fiscally conservative officials and a persistent critic of
the latest round of bond buying, said in WirtschaftsWoche.
"An end to these bond purchases came into sight at the
latest Fed meeting," said Lacker, who is not among the Fed
policymakers who will vote on monetary policy this year.
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 programme.
"First of all we should end the monthly purchases of
mortgage bonds as quickly as possible," Lacker said in the
interview. It was not the central bank's role to give any sector
preferential support, he said.
Lacker said the United States had made hardly any progress
in cutting its debt and had instead only come up with temporary
solutions for several months at a time.
He said he hoped the Fed's planned scaling back of bond
purchases this year and rising interest rates 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.
Whoever takes the helm at the Fed when Bernanke's term as
chairman ends in January 2014 must find a way to exit the
bond-buying programme without shocking the markets, Lacker said.
He said the quantitative easing programme had done little to
boost the economy, and the U.S. economy would grow by 2 percent
this year and by no more than 2.25 percent next year - lower
than the 2.8 percent in 2013 and 3 percent in 2014 forecast by
other Fed policymakers - as consumers remain cautious.
Lacker said more needed to be done on drawing up rules to
avoid future government bank rescues and said stress tests done
in the United States were a step in the right direction.