Fed to continue tapering but interest rate decision remains on hold, says Fisher

The US Federal Reserve is likely to continue tapering its multi-billion dollar bond-buying programme at a similar pace, despite signs that the recovery might be slowing, one of its top officials has said.

Richard Fisher - who is the president of the Federal Reserve Bank of Dallas - said the central bank remained on course to wind down its monetary stimulus by the end of the year. However, he said policymakers would not consider raising interest rates until its balance sheet stopped expanding.

"I personally expect us to end [quantitative easing] in October. That's the first step," he told Fox News. "Then we have to see how the economy is doing, including these broader measures of unemployment, and where we stand, before we can talk about how we might move the short-term rate."

The Federal Reserve began reducing the size of its $85bn-a-month asset purchases in January. Last week it continued that process, trimming monthly purchases to $45bn, despite data that showed the world's largest economy expanded by just 0.1pc on an annual basis in the first three months of the year.

More recent data have presented a mixed picture of the US economy. Figures last week showed the economy hired workers at the fastest pace in more than two years in April . However, the labour participation rate remains at levels not seen since the 1970s, as more Americans give up looking for work.

Mr Fisher - a hawkish member of the Fed - said the US economy was "moving in the right direction" and "getting stronger" as private-sector payrolls increased. Asked when interest rates were likely to rise, Mr Fisher replied: "It's too early to tell ...I'll make this prediction: some time in the next 100 years."

more