A “modest adjustment downward, in our purchase program” is possible as “early as this summer,” San Francisco Fed President John Williams said today. He doesn’t hold a policy vote this year.
Inflation is not an immediate concern, Lockhart said. “We’re just in a spell of very soft inflation numbers.”
“Inflation expectations appear to be well anchored and measures of inflation expectations are really not indicating a move toward deflationary territory,” he said. Still, “I don’t think we can dismiss downside risk related to inflation.”
Inflation has fallen below the central bank’s 2% target. Price gains were 0.7% from a year earlier in April, according to the Fed’s preferred price gauge, which is tied to consumer spending patterns.
In a May 22 interview, Williams said any move to reduce the pace of bond buying could be followed by an increase should the economy weaken again.
“Even if we do adjust downward our purchases, it doesn’t mean we’re now in some autopilot of moving in the same direction,” Williams, 50, said. “You could even imagine a scenario where we adjust it downward based on good data and then adjust it back” if the economy weakened.
A former Georgetown University professor, Lockhart has led the Atlanta Fed since 2007. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.