Fed's Pianalto Floats Reducing Asset Purchases This Year

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Reducing the Federal Reserve's level of asset purchases before year end would be an attractive option if the economy continues to improve, a top U.S. central bank policymaker said on Friday.

Cleveland Fed President Sandra Pianalto said she does expect the U.S. economic outlook to improve, and outlined a number of risks posed by the central bank's program of buying $85 billion in assets per month, including credit and interest-rate risks, as well as inflation.

"To minimize some of these risks, we could aim for a smaller sized balance sheet than would otherwise occur if we were to maintain the current pace of asset purchases through the end of this year, as some financial market participants are expecting," Pianalto told a business audience at Florida Gulf Coast University, according to prepared remarks.

"This course of action would be all the more attractive if the economic outlook continues to improve, as I expect it will."