Fed’s Rosengren gets on board with US plans to taper stimulus

City A.M. Reporter
THE LONE US Federal Reserve official to dissent against the Fed’s decision last month to cut stimulus said yesterday he is nonetheless comfortable with the current approach of reducing bond-buying by $10bn (£6.08bn) increments at each policy meeting.

In an interview, Boston Fed president Eric Rosengren warned against any “dramatic steps” to wind down the asset purchases and gave what might be the most detailed outline to date of what economic conditions might cause the Fed’s policy-setting committee to veer from a uniform withdrawal of accommodation.

The comments from the dovish central banker may reinforce public expectations that the so-called quantitative easing programme, or QE, is on track to be wound down and shelved by year end with few surprises along the way.

“I’m comfortable with the current approach that it looks like we’re going to be following through on,” Rosengren said.

Last month, the Fed reduced to $75bn from $85bn the amount of assets it buys each month in an aggressive effort to spur investment and hiring in the protracted wake of the financial crisis.

Rosengren, who repeated yesterday he would have preferred to delay the policy change, appeared to be getting in line with what Bernanke called a “measured” removal of what amounts to the biggest monetary policy experiment in history.