WASHINGTON, Jan 13 (Reuters) - The Fed's current pace of
bond-buying will likely remain in place "for quite some time"
Fed Governor Lael Brainard said on Wednesday in remarks
emphasizing how much progress still needs to be made for the
U.S. central bank to achieve its inflation and employment goals.
The Fed "has stated clearly that it needs to see substantial
further progress towards our goals before adjusting purchases.
The economy is far away from our goals in terms of both
employment and inflation and even under an optimistic outlook it
will take time to achieve substantial further progress,"
Brainard said in prepared remarks to the Canadian Association
for Business Economics.
Before any change is warranted in the Fed's current $120
billion in monthly asset purchases, "I will be looking for
sustained improvements in realized and expected inflation and
will examine a range of indicators to assess shortfalls from
maximum employment," Brainard said.
The Fed's preferred measure of inflation as of November was
at 1.4%, compared to its 2% target, Brainard noted, and the
economy is still about 10 million jobs short of its pre-pandemic
Her remarks add the weight of an influential member of the
central bank's Board of Governors to a debate that has attracted
more-than-expected attention lately. Some Fed regional bank
heads have suggested the rollout of coronavirus vaccinations
could supercharge the economy in 2021 and warrant changes to the
Fed's bond-buying later this year.
Along with the Fed's low benchmark overnight interest rate,
which is expected to be on hold for a long time, the monthly
bond-buying program aims to hold down borrowing costs for
businesses and households.
Once the economy improves, the Fed intends to diminish the
bond purchases before raising interest rates, making the debate
over when to begin any "taper" of the monthly purchases a test
of how fast it thinks the economy is improving.
(Reporting by Howard Schneider
Editing by Paul Simao)