Fed Chair Jerome Powell said yesterday that “we will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals”. He added that tapering would, “in all likelihood be before, well before,” Fed considers rate hikes and “that is the sense of the guidance”.

Separately, Vice Chair Richard Clarida said that if inflatoin expectations “drift up persistently”, policy would need to be adjusted. For example, if wages start to grow consistently faster than productivity, that would set the stage for a “sustained increase in inflation”. He added, “we are going to be very attentive to what we are seeing in the nexus between wages, productivity, prices and markups.

New York Fed President John Williams said, “the economy is coming back pretty strong right now.” “There’s a lot of things that are uncertain,” he added. “But I think the economy will be able to get back to full strength.” But he also acknowledged, “we’re a little bit in a race between the vaccinations and the new variants of the coronavirus.”

Fed Beige Book report noted that national economic activity “accelerated to a moderate pace from late February to early April. Consumer spending “strengthened” and reports on tourism were “more upbeat”. Auto sales also “grew”. The picture in non-financial services “generally improved”. Manufacturing activity “expanded further” despite widespread supply chain disruptions. Outlooks were “more optimistic” thanks to acceleration in vaccinations.

Employment growth “picked up” with most Districts noting “modest to moderate” increase in headcounts. But pace of job growth “varied by industry”. Employment expectations were “generally bullish” and wage growth “accelerated slightly over all”. Prices “accelerated slightly” with many Districts reporting “moderate price increase”. There were “widespread reports” of increased selling prices too.

Full Beige Book here.

Philadelphia Fed Bank President Patrick Harker said, “Fed policy is going to hold steady”. He added, “while the economic situation is improving, recovery is still in its early stages, and there’s no reason to withdraw support yet.” He also noted that “we’re not seeing inflation running out of control.” Instead, he’d be more concerned with inflation that is too low.

Boston Fed President Eric Rosengren told WSJ that he’s expecting a “very strong economy over the course of this year”, and unemployment to “get quite low by the end of the year.” But he’s not giving a specific forecast about where the rate liftoff to be, as there’s no such foresight in the only post-war pandemic. “I think we’re two years away from when that likely is going to become a much more important question,” he said.