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The Fed: Fed’s Mester backs bond buying taper this year despite slower job growth in August

Cleveland Fed President Loretta Mester said Friday that the August employment report didn’t alter her view that the central bank should begin to slow down its monthly purchases of bonds this year.

“I would like us to begin tapering some time this year,” and wind down the purchases over the first half of 2022, Mester told reporters after a virtual speech to a conference sponsored by the Bank of Finland.

There are different views among the Fed leadership on the precise timing of when to start the taper. Comments from New York Fed President John Williams earlier this week suggest the leadership of the central bank doesn’t want to announce a plan at the next meeting on Sept. 21-22.

Mester didn’t say where she would come down on this debate. She will be a voting member of the Fed’s interest-rate committee next year.

Many economists viewed the growth in the number of jobs in August as a disappointment.

Mester said she didn’t think the coronavirus delta variant would “stall” the economy.

Businesses and households have learned to navigate the pandemic, she said.

While economic growth may slow in the fourth quarter as a result of the variant, growth should be relatively strong and employment growth should continue, she said.

The Cleveland Fed president said that inflation has risen higher than she expected this year but should moderate next year.

Read: U.S. core producer prices rise at softer pace in August

“I think some of the supply constraints should come off,” which should stop prices from rising further, Mester said.

Mester said she had a 2% inflation rate “penciled in” for 2022, although she might adjust this forecast ahead of the Fed meeting in ten days.

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turned lower Friday on concern that President Joe Biden’s tough stance on vaccinations announced last night might slow the economy.

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