(Adds Harker's comments on inflation goal)
By Jonnelle Marte
May 21 (Reuters) - Federal Reserve officials should start talking about the best way to reduce their asset purchases "sooner rather than later," Philadelphia Fed Bank President Patrick Harker said on Friday.
The U.S. central bank will communicate its plans for slowing its purchases of Treasury bonds and mortgage-backed securities well in advance of it happening, Harker said during a virtual conversation organized by the Washington Post.
"It is something that, in my mind, we should start to have a conversation about sooner rather than later," Harker said.
The policymaker said unwinding the central bank's asset purchases from the current pace of $120 billion a month would be the "first step" in removing the support the Fed is offering the economy. If the recovery continues to progress, officials would then look at raising interest rates at the "appropriate time."
A "number" of Fed officials appeared ready to consider changes to monetary policy based on a continued strong economic recovery, according to minutes of the U.S. central bank's April meeting. But that view may have suffered a blow this month with the release of data showing job growth was anemic in April.
Harker said he is looking for "continued strength" in the labor market before the Fed would start the process of removing accommodation. He said the U.S. economy may need to add up to 11 million jobs to close the hole left by the pandemic, including the 8 million jobs lost and the previous job growth cut off by the crisis.
The policymaker also said he wants to see inflation move above the Fed's 2% target and averaging 2% over time, with inflation expectations anchored at 2%, before it would be "appropriate" to talk about tapering. (Reporting by Jonnelle Marte; Editing by Franklin Paul and Andrea Ricci)