Fed’s Daly: Tapering of asset purchases could start as soon as this year – FT

“The Federal Reserve could start dialling back its ultra-accommodative monetary stimulus by the end of the year, given the strength of the economic rebound,” said San Francisco Federal Reserve Bank President Mary Daly in her latest interview to the Financial Times (FT).

The news piece also notes the Fed policymaker expressed confidence that the robust recovery in household and business activity from the depths of the Covid-19 collapse would continue to gather momentum as more people returned to the workforce and consumer spending remained buoyant, setting the stage for a policy pivot in the coming months.

Key quotes

I remain very optimistic and positive about the fall and ongoing improvements in the key variables we care about.

That for me means it’s appropriate to start discussing dialling back the level of accommodation that we’re giving the economy on a regular basis, and the starting point for that is of course asset purchases.

Talking about potentially tapering those later this year or early next year is where I’m at.

Market reaction

As Daly is a voting member of the Federal Open Market Committee (FOMC), her hawkish comments pull EUR/USD back from the intraday high. Even so, the quote marks 0.05% daily gains near 1.1745 amid a sluggish Thursday morning.

Read: EUR/USD treads water above 1.1700 as USD ignores firmer Treasury yields