San Francisco Fed President Mary Daly said in an FT interview that she remained “very optimistic and positive”. She added, ” it’s appropriate to start discussing dialling back the level of accommodation that we’re giving the economy on a regular basis

“The starting point for that is of course asset purchases,” she said. “Talking about potentially tapering those later this year or early next year is where I’m at.”

On the employment markets, she said “we’re really adding enough jobs to see that we’re making progress towards our full employment goal.” While “we’re not there yet… we’re chipping away at the hole that was dug by Covid.”

Dallas Fed President Robert Kaplan said yesterday that if the economy unfolds between now and the September meeting as he expected, “I would be in favor of announcing a plan at the September meeting and beginning tapering in October.”

“The reason I’m saying we ought to begin the tapering soon is I think these purchases are very well equipped to stimulate demand. But we don’t have a demand problem in the economy,” he told CNBC.

“My thought is I’d rather take the foot off the accelerator soon and reduce the RPMs,” he added. “What I don’t want to do is keeping running at this speed for too long and then we’re going to have to take more aggressive action down the road.”

Kansas City Fed President Esther George said in a speech, “with the recovery underway, a transition from extraordinary monetary policy accommodation to more neutral settings must follow”. She added, “today’s tight economy… does signal that the time has come to dial back the settings” of monetary stimulus.

“While recognizing that special factors account for much of the current spike in inflation, the expectation of continued strong demand, a recovering labor market, and firm inflation expectations are consistent, in my view, with the Committee’s guidance regarding substantial further progress toward its objectives. I support bringing asset purchases to an end under these conditions,” she said.

Full speech here.

Richmond Fed President Thomas Barkin said “we’re closing in” and he’s “very support of tapering and moving back toward a normal environment”. However, it’s credible to think “we will get there in the next few months” and he didn’t want to commit to a timetable yet.

“I would like to be at a normal level of participation in the asset markets and a normal level of rates,” Barkin said. But “I also think that as a committee, when you put out forward guidance you think about it carefully and then do your best to live to that.”

“On the employment side you have a hypothesis that you are going to bring a lot more back in. On inflation you have a hypothesis that these things are transitory,” he said. “I need to test both of these.”

Chicago Fed President Charles Evans sounded more cautious than some of his FOMC colleagues in the topic of tapering. He acknowledged that the US is “making progress” and “well on our way” to substantial further progress. But, “I’d like to see a few more employment reports,” before making the decision.

“Everybody is wondering about September, November, December, January,” as possible dates to start scaling back asset purchases, Evans said. “I don’t think that one meeting on either side is going to have an important effect.”

“We should not preemptively end a strong improvement in the labor market because somebody is getting nervous about inflation,” he said. “I am going to be very regretful if we sort of claim victory on averaging 2% and then find ourselves in 2023 with about a 1.8% inflation rate … That would be a challenge for our long run framework.”

Atlanta Fed President Raphael Bostic said yesterday, “we are well on the road to substantial progress toward our goal”, and July’s 943k job growth was “definitely quite encouraging in that regard.”

“My sense is if we are able to continue this for the next month or two I think we would have made the ‘substantial progress’ toward the goal and should be thinking about what our new policy position should be,” he said.

“Right now I’m thinking in the October-to-December range, but if the number comes back big” as with the last report “or maybe even a little bigger, I’d be open to moving it forward,” Bostic said. “If the number really explodes, I think we would have to consider that.”

Also, he said he favored a “balanced” approach on tapering both the MBS and treasuries purchases at the same fate, and “going relatively fast”. “The economy is in a much different place today” and “I am pretty confident these markets are going to continue to function even with a more rapid withdrawal, and I would be willing to lean into that to try to get us to complete the taper in a shorter period than what we have done in previous rounds.”

Boston Fed President Eric Rosengren said yesterday if the US continues to have job growth like the last two months, with “very substantial payroll employment gains”, then by September meeting, the “substantial further progress” criteria should be met. That would “imply starting to taper sometime this fall”.

“If you continue to purchase assets, the reaction primarily is in pricing, not so much in employment,” he added. “I don’t think asset purchases are having the desired impact on really promoting employment.”

According to the July Survey of Consumer Expectations by the New York Fed, median one-year-ahead inflation expectations were unchanged at record 4.8%. Also, 3-year inflation expectation rose further from 3.6% to 3.7%, hitting the highest level since August 2013.

Full release here.