KC Fed President Calls for QE Adjustment

FOXBusiness

Fed's George: Don’t Want to Stay Near 0% for Too Long

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Fed's George: Don’t Want to Stay Near 0% for Too Long

Web exclusive: Kansas City Federal Reserve President and Fed dissenter Esther George on her outlook for bond buying, inflation, interest rates and a Jackson Hole without Bernanke.

Another top Federal Reserve official signaled Tuesday the central bank should start winding down one of its major economic stimulus programs.

In her first television interview since her appointment in 2011, Esther George, president of the Federal Reserve Bank of Kansas City, told Fox Business that she favors scaling back the Fed's "quantitative easing" bond buying program "faster and sooner," in part because of improving monthly jobs numbers.

Since the 2008 financial crisis, the Fed has purchased more than $2.5 trillion in bonds to help push down interest rates on auto loans, mortgages and business loans. The purchases, currently $85 billion a month, have raised its bond holdings to an unprecedented $3.4 trillion.

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"I think it is time to begin to adjust those purchases," George said. "The labor market has shown now, for the last six months, pretty steady gains of close to 200,000 per month. That is a good indicator that there has been sustained improvement here and that I think it would be appropriate, given the size of our balance sheet, given the level of accommodation, that we begin to make adjustments that reflect that improvement as we go forward."

In remarks to an agriculture conference after her interview, George said the Fed could start tapering bond purchases at its policy meeting in September, with the goal of ending all bond purchases in the first half of 2014.


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