MNI BRIEF: Kaplan--Fed Should Take Foot Gently Off Accelerator

Dallas Fed President Rob Kaplan Thursday said Thursday the Fed should consider taking its foot off the accelerator and talking about tapering its monthly asset purchases, to avoid potentially having to hit the brakes harder down the road.

"My job as a central banker is not to predict the future with 100% accuracy because I know I'm not capable of that, but it is to look at a range of possible outcomes and not get intellectually wedded to any one of them and then to manage the risks," he said. "This is one of the reasons, among other imbalances I'm seeing that I've talked about in risk-taking in the housing market, this is one of the reasons why I've said, sooner rather than later as it's clear we're weathering the pandemic and making progress in the economy, I'd like to sooner rather than later begin a discussion of adjusting our asset purchases."

"I'd like to take my foot a little bit off gently off the accelerator in order to avoid having to press down on the brakes down the road," he said in a webinar. Several Federal Reserve officials believed it might be appropriate to begin talking about tapering in coming months if economic improvements are sustained, minutes from the central bank's April meeting said earlier this week. MNI reported Thursday the Fed may consider an MBS-led taper when the times comes because of concerns about overheating in housing.