John C. Williams, the president of the Federal Reserve Bank of New York and a powerful monetary policy official, hinted that it might be possible for the central bank to begin removing support for the economy before the end of the year even if the job market grows at a lackluster pace in coming months.
The Fed has been buying $120 billion in government-backed bonds each month to help the economy by keeping interest rates low and money flowing. Policymakers have been debating when to begin slowing that program. They said in December that they would do so only once they had made “substantial further progress” toward maximum employment and inflation that averages 2 percent over time.
Key policymakers have made it clear that the inflation side of that goal has been satisfied, with prices up markedly this year, but they have been waiting for more progress on employment. Assessing the job market has been complicated by surging coronavirus infections tied to the Delta variant, and payroll gains slowed in August.
Mr. Williams, who holds a constant vote on monetary policy and is foremost among the central bank’s 12 regional policymakers, told reporters on Wednesday that he had been looking at the cumulative level of employment progress rather than month-to-month changes — suggesting that weakening jobs growth would not necessarily make impossible a start to the so-called taper.
“It’s not a speed condition,” Mr. Williams said. “It’s really about, where are we, relative, on this path back toward maximum employment?”
He added that he was looking not just at job gains but also at measures like labor force participation for a “full picture” of how much progress the job market has made.
“Some months come in stronger, some not so strong,” Mr. Williams said. “It’s really about accumulation.”
He added, “We’ll have to wait and see the data as it comes in.”
Mr. Williams said during a speech earlier in the day that if the economy continued to improve as he expected, “it could be appropriate to start reducing the pace of asset purchases this year.” Pulling back on bond buying will be just a first step in removing support, and the Fed’s policy interest rate is expected to remain at near zero for some time.
His comments came just as the Fed released its latest anecdotal survey of business contacts across its regional districts, commonly called the “Beige Book.” “Delta” was referenced 32 times as employers reported that “growth downshifted slightly to a moderate pace in early July through August.”