RALEIGH, N.C. Jan 10 The U.S. Federal Reserve
will likely consider further reductions in the pace of bond
purchases at coming meetings given the improvement in the labor
market conditions, a top Fed official said on Friday.
Richmond Federal Reserve President Jeffrey Lacker said
although a recent pick-up in U.S. economic growth was
encouraging, he expected the pace of expansion to ease this year
to closer to 2 percent.
Fiscal policy, a downshifting in household spending and
business reluctance to hire and invest would all help to dampen
growth, he said, urging lawmakers to act quickly to fix
long-term budget imbalances.
But overall, he said, the Fed's decision last month to slow
the pace of monthly bond buys by $10 billion to $75 billion a
month was appropriate given better labor market conditions over
the past year.
"It made sense to initiate the process of bringing the
program to a close," he said in remarks prepared for delivery to
the Greater Raleigh Chamber of Commerce.
"I expect further reductions in the pace of purchases to be
under consideration at upcoming meetings."
Lacker, who has been an opponent of bond buying from its
start, has said incoming economic data would have to be much
weaker on a sustained basis to pause the process of winding down
asset purchases, which is expected by the end of 2014.
Some policymakers have expressed concern about inflation
running persistently below the Fed's 2 percent target -- on its
preferred measure inflation is running at just 1.1 percent on an
Lacker said he was confident inflation would move back
towards 2 percent in the next year or two but added: "This is
not a certainty, however, and I believe the FOMC will want to
watch this closely," referring to the policy-setting Federal
Open Market Committee.