'Not the time' to discuss any change to bond purchases: Fed's Powell

With the U.S. economy still far from its inflation and employment goals it is too early for the Federal Reserve to discuss changing its monthly bond purchases, Fed Chair Jerome Powell said Thursday.

“Now is not the time to be talking about exit,” from the $120 billion in government securities the Fed is buying each month, Powell said in a web symposium with Princeton University. “A lesson of the Global Financial Crisis is be careful not to exit too early and by the way try not to talk about exit all the time if you are sending that signal because the markets are listening.”

“The economy is far from our goals…and we are strongly committed…to using our monetary policy tools until the job is well and truly done,” Powell said, pushing back against recent suggestions from some of his colleagues that the Fed might consider trimming its bond purchases even later this year.

Those suggestions may have contributed, if slightly, to a recent rise in yields on U.S. Treasury securities.

Fed talk of trimming bond purchases after the 2007 to 2009 financial crisis at one point triggered rapid changes in global bond yields, a “tantrum” Fed officials have since tried to avoid by flagging any changes to their asset purchases well ahead of time.

Powell promised that would be the case with the current purchases as well.

He said an interest rate increase as well would come “no time soon” given the depth of the economic problems related to the still-raging pandemic.