The U.S. Federal Reserve will likely consider further reductions in the pace of bond purchases at coming meetings given the improvement in the labor market conditions, a top Fed official said on Friday.
Richmond Federal Reserve President Jeffrey Lacker said although a recent pick-up in U.S. economic growth was encouraging, he expected the pace of expansion to ease this year to closer to 2 percent.
Fiscal policy, a downshifting in household spending and business reluctance to hire and invest would all help to dampen growth, he said, urging lawmakers to act quickly to fix long-term budget imbalances.
But overall, he said, the Fed’s decision last month to slow the pace of monthly bond buys by $10 billion to $75 billion a month was appropriate given better labor market conditions over the past year.
“It made sense to initiate the process of bringing the program to a close,” he said in remarks prepared for delivery to the Greater Raleigh Chamber of Commerce.
“I expect further reductions in the pace of purchases to be under consideration at upcoming meetings.”