Richmond Fed President Thomas Barkin told WSJ that labor market recovery doesn’t warrant tapering the asset purchase program yet. He said, “if the labor market can clear relatively quickly, then maybe it can happen sooner, but if it takes longer for the labor market to reopen, it goes a little later.”
Specifically, the “employment-to-population” ratio would be important to determine whether Fed could dial back the massive stimulus it’s providing to the economy. The ratio tumbled from pre-pandemic 61.1 in February 2020 to as low as 51.3% last April. It then gradually climbed back to 58% this June. Barkin said it should be something just north of 59% before he’d consider tapering.
Also he talked down the threat of inflation as it could “cool more than expected once the economic reopening process is complete.”
