MNI BRIEF: Fed's Kaplan Says QE Taper Timeline Pulled Forward

Dallas Fed President Robert Kaplan said Friday that reaching the central bank's benchmark of "substantial further progress" on its asset purchase program has has been pulled forward as the economic rebound has been stronger than previously thought due to a robust vaccination program and strong policy support.

Because of excesses and imbalances in financial markets, including a robust housing market, it will be appropriate for the central bank to "start talking about" adjusting the central bank's USD120 billion monthly asset purchases "at the earliest opportunity," said Kaplan, a non-voter on the FOMC in 2021 (back 2023).

"I think we're going to reach that benchmark [substantial further progress] sooner than I would have expected in January and others would have expected, and so I think the US economy will be far healthier when we have the ability to start weaning off those purchases."

In mid-Jan, Kaplan said he hoped taper discussions might begin "later this year." Former Fed officials have told MNI that the central bank has edged closer to its "substantial further progress" mark, while some ex-officials have said the Fed could signal a more formal internal debate in the summer.