MNI BRIEF: Williams Comfortable With Fed Taper Ending Mid-2022

New York Fed President John Williams said Monday if economic conditions keep up as anticiaped then it would be reasonable to see the central bank's taper process ending by the middle of next year.

"In terms of parameters of this, I do think assuming the economic conditions support the beginning of taper soon then there is a way to do this that would not disrupt markets at all, be smooth, and be done by the middle of next year as a reasonable way to think about this," said Williams, in a call with reporters after speaking to the Economic Club of New York. "We can phase out the purchases over a reasonable amount of time. I'm not really worried about that creating any market functioning issues."

The New York Fed chief also said he doesn't yet see any large permanent effects from the central bank's USD8.5 trillion balance sheet on the neutral interest rate. Kansas City Fed President Esther George last week said maintaining a larger balance sheet could mean a higher terminal policy rate.