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Kaplan (Fed): reduction of bond purchases should be done "sooner rather than later"


Robert Kaplan, chairman of the Dallas Federal Reserve (Fed), believes that reduction of central bank bond purchases has to start tapering off as soon as possible. These statements were made in a talk with other expert economists, including James Bullard, from the St. Louis Fed.

"I think it would be healthier, since we are making progress in overcoming the pandemic and in achieving our goals, start adjusting these purchases – Treasury bonds and mortgage-backed securities – sooner rather than later, "said Kaplan, according to Bloomberg.

On the possible rise in rates and how it could affect the growth of the economy, the leader of the Dallas Fed did not want to comment. Despite this, he has affirmed that he believes that inflation has come to stay.

"The imbalances between supply and demand, some of them we believe will resolve themselves in the next six to twelve months, but again, some of them we think they will probably be more persistent, driven by a series of structural changes in the economy, "he said.

These statements were made at a round table in which James Bullard, president of the St. Louis Fed, participated, who last week declared that the first rate hike would take place in 2022. He has also called the statements of his counterpart in Dallas appropriate.

"Nobody really knows how this is going to play out," he said. And he also pointed out that "we have to be prepared for the idea that there is an upward risk of inflation and for it to rise."

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