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Atlanta Fed's Bostic: 'Not my expectation' to taper QE this year

Brian Cheung
·Reporter
·2 min read
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Federal Reserve Bank of Atlanta President Raphael Bostic said Thursday that he does not expect economic conditions to warrant a wind down in the Fed’s aggressive asset purchase program this year.

“We're not locked into anything, and our policy is actually going to be data-driven,” Bostic told Yahoo Finance in an exclusive interview Thursday.

[Read the full transcript here.]

The Fed has messaged that it will continue to buy at least $120 billion a month in mortgage-backed securities and U.S. Treasuries until the economic recovery makes “substantial further progress.”

Many Fed officials have shied away from offering more specific guidance on when the economy would achieve that progress - and then begin tapering the so-called quantitative easing, or QE, program.

But earlier in the month, Bostic told Reuters that he was “hopeful that in fairly short order” the Fed could start to slow its asset purchases, as soon as this year.

ATLANTA, GA - AUGUST 4: Branch President Raphael Bostic poses for portrait in front of Atlanta, Georgias Federal Reserve Bank on August 4, 2020. (Photo by Eric Hart Jr. for The Washington Post via Getty Images)
ATLANTA, GA - AUGUST 4: Branch President Raphael Bostic poses for portrait in front of Atlanta, Georgias Federal Reserve Bank on August 4, 2020. (Photo by Eric Hart Jr. for The Washington Post via Getty Images)

The Atlanta Fed chief’s remarks on Thursday appeared to soften that stance.

Bostic told Yahoo Finance Thursday that his modal forecast is for U.S. GDP to grow by 5% to 6% in 2021. But asked if that modal forecast was substantial enough to warrant a tapering this year, Bostic said “that’s not my expectation.”

Bostic added that while he is still “open to any possibility,” he emphasized that the Fed does not want to give off the impression that it is “eager” to pull back monetary policy support.

“One other thing I should say — and I didn't say this in those earlier interviews and that was a mistake on my part — is that our new long-run framework says explicitly we're going to be willing to let the economy run hot,” Bostic said.

The Atlanta Fed chief is a voting member of this year’s policy-setting Federal Open Market Committee, which decided last week to hold interest rates steady at near-zero.

Bostic reiterated that the vaccine distribution will be the biggest driver for the path of the economy, but said too few people have been inoculated to see any effect on the aggregate performance of the economy.

Ahead of tomorrow’s jobs report, Bostic said he expected the holiday season to be tough but hopes the report will show the economy past the “trough.”

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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