Fed’s George: We are forecasting in a bit of a fog

Kansas City Fed President Esther George said that the U.S. job market has already met the Federal Reserve’s benchmark test sufficiently to decrease its monthly bond purchasesز
George mentioned that the central bank should now turn to discussion of how its massive bondholdings may add complication to its eventual decision about when to raise interest rates.
“The criteria for substantial further progress has been met…The rationale for continuing to add to our asset holdings each month has waned”, George said in remarks to the American Enterprise Institute.
While the ongoing pandemic remains a risk, with labor and goods markets still facing supply constraints and bottlenecks, she asserted that she felt that those problems would ease over time and more normal patterns of consumption, work and hiring can reemerge.
The challenge now for the Fed, she said, is to determine how its balance sheet, pushing USD 8.5 trillion in securities holdings, will complicate a coming discussion on interest rates.