MNI BRIEF: Fed Kaplan Says QE Taper Debate To Begin Late 2021

Dallas Fed President Robert Kaplan said Monday he expects the central bank to wait until later this year before beginning to debate whether to start reducing the pace of its asset purchases, currently set at USD120 billion per month.

"Some time later this year we should be at least beginning discussions about the thought of tapering," Kaplan said in a webinar. "It would be my hope that it might be this year." That would mean "we can begin in earnest the discussion about tapering back the size of those purchases. But we'll have to see how the economy unfolds this year to see when we reach that point."

The months ahead will be a "rough, challenging couple of months," the Dallas Fed chief added, but GDP growth will be "modestly positive" in the first quarter of the year and around 5% for the year, that could be revised upward depending on the path of vaccine distribution and fiscal policy. Kaplan said he sees unemployment dipping to about 4.5%-4.75% by year-end, down from 6.7% currently.