Clarida says the Fed’s bond purchases will keep pace with the rest of the year

Federal Reserve Vice President Richard Clarida said he expects the central bank to keep pace with its asset purchases until 2021.

“My economic outlook is in line with maintaining the current pace of procurement for the rest of this year,” he told the Foreign Relations Council in a presentation on Friday.

As it stands, the Fed buys at least $ 120 billion a month, split between a minimum of $ 80 billion in treasury and $ 40 billion in mortgage-backed securities. The pace of procurement accelerated through the Covid-19 pandemic as a continuous effort to both maintain economic growth and the functioning of the market.

Markets wondered how long the Fed would keep the program running, given that its holdings now eclipsed $ 7 trillion.

Clarida said on Friday that it does not see a retreat at any time this year, even though it expects growth to accelerate.

“I think it could be quite a while before we think about slowing down our acquisitions as we look at the data and I’m relatively optimistic about the economic outlook,” he added in a session moderated by CNBC’s Steve Liesman. “We want further progress in the labor market and the transition to our 2% inflation target, and I think there is some distance before we declare victory in this regard.”

While the Fed will keep its options open as the economy progresses throughout the year, Clarida said officials are determined to reach and likely exceed their inflation target, as well as take an integrated and inclusive job.

Following the December meeting, the Fed pledged to maintain its asset purchase program until substantial progress is made on the mandate. Earlier this week, Atlanta Fed Chairman Raphael Bostic said he would not be surprised if the pace of bond buying slows by the end of the year.

“Right now, I think maintaining the current pace of procurement for the rest of this year is my expectation,” Clarida said.