Fed’s George says it’s time to start tapering asset purchases

Kansas City Federal Reserve President Esther George said Thursday the U.S. central bank should begin winding down its massive bond-buying program as the U.S. economy continues to recover from the COVID-19 pandemic.

Though George did not mention specifics about tapering the Fed’s $120 billion in monthly purchases of Treasury bonds and mortgage-backed securities – including a start date or amounts – she suggested policymakers should begin sometime this year.

For months, the U.S. central bank has been grappling with conflicting economic data – surging inflation but slower-than-expected job growth, coupled with the new threat posed by the highly contagious delta variant – and when to begin unwinding the ultra-easy monetary policies implemented to keep the economy afloat in March 2020.

The issue has been complicated by a sharp divergence of opinions among members of the Federal Open Market Committee; minutes from the Fed's July meeting show that while “most” officials are prepared to reduce the $120 billion in monthly asset purchases this year, others think it best to wait until 2022.

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