Fed officials say cutting bond buying will open path to rate hikes

Two regional Federal Reserve officials said Monday that a faster withdrawal from the central bank’s bond purchase program could give it more leeway in deciding when to raise interest rates.

The discussion of how fast to end the Fed’s $120 billion monthly bond purchase program is only just beginning, but policymakers should keep in mind how it affects the debate that will follow it over interest rates. “Creating optionality for the committee will be really useful and that will be part of the taper debate as we think about how much signaling we are doing about future rate policy,” St. Louis Fed president James Bullard said during a virtual event organized by the Official Monetary and Financial Institutions Forum and the Philadelphia Fed.