Fed officials indicate that they are likely to move to taper

Federal Reserve officials on Thursday indicated that they would likely move to more quickly draw down the central bank's pandemic-era policy of aggressively buying bonds and other securities.

There are rising inflationary pressures that the Fed policymakers are not describing as transitory. I do take seriously actual inflation and its impact, Richmond Fed President Tom Barkin said at a Peterson Institute for International Economics event Thursday. I am supportive of normalizing policy as we do it. In part, interest rate hikes, which many Fed watchers expect to happen in 2022, are a result of normalizing. Before the Fed can raise rates from the current levels of near zero, the policy-setting Federal Open Market Committee will want to end its asset purchases.

Under the quantitative easing program, the Fed was purchasing about $120 billion a month in agency mortgage-backed securities and U.S. Treasury bonds. In early November, the FOMC said it would begin slowing down — or tapering — those purchases by about $15 billion per month. The quantitative easing program would come to a complete stop at that pace by the middle of next year.

The central bank's top official, Jerome Powell, told Congress this week that a discussion to speed up that process would likely happen at the next FOMC meeting in two weeks.

San Francisco Fed President Mary Daly, who first told Yahoo Finance on November 23 that she could support a faster taper, said on Thursday she could still support a taper to position the Fed for eventual rate hikes.

At Peterson event, Daly stated, "Not to take accommodation away completely, but to begin lessening the accommodation we are providing when the economy is looking to be self-sustaining."

Raphael Bostic, the Atlanta Fed president, told Reuters on Thursday that he would like to end the program sooner than later. Bostic said that it may be appropriate to pull forward a liftoff if the data points to more elevated readings of inflation. In October, prices went up 6.2% year-over-year, the fastest annual rise seen in the Consumer Price Index since 1990. On November 10, the Bureau of Labor Statistics will release data covering the month of November.

Fed Governor Randal Quarles said Thursday that he feels that the inflationary dynamics seem to show the impact of higher underlying demand, a departure from recent interpretations that blamed faster price increases on COVID-related supply chain bottlenecks.

Quarles said that we should respond more quickly to constrain that demand, which could lead to a sharper pullback in the Fed's easy money policies.

Quarles recently said he would be leaving the Fed at the end of the month, meaning his participation in the Dec. 14 and Dec. 15 FOMC meeting will be the last of his tenure.

Brian Cheung is a reporter covering the Fed, economics and banking for Yahoo Finance. You can follow him on Twitter at bcheungz.