Washington, Jan 15 (AP) Federal Reserve Chair Jerome Powell sought Thursday to tamp down any concerns that the Fed might soon withdraw some of its support for the US economy and stressed that any such pullback would be signalled far in advance.

During an online discussion hosted by Princeton University, from which Powell earned his undergraduate degree, the Fed chair said the recovery of the economy from the pandemic recession “is far from our goals."

The Fed had said after its last policy meeting last month that it would continue to buy USD 120 billion in bonds each month until the economy made “substantial further progress” toward the Fed's goals of maximum employment and stable 2 per cent inflation.

“When that happens — and we can see that clearly — we'll let the world know," Powell said. "We will communicate very clearly to the public and we'll do so well in advance before actively considering any tapering of asset purchases.”

The bond purchases are intended to hold down longer-term interest rates to encourage consumers and businesses to borrow and spend. Lower rates on 10-year Treasurys, for example, reduce borrowing costs for home and car buyers. At the same time, the central bank is keeping its benchmark short-term rate at a record low near zero to help support the economy.

Powell's remarks Thursday follow recent speculation in financial markets that the Fed might start reducing its bond purchases as early as this year, sooner than was previously expected. Investors have been selling Treasuries, increasing the yield on the 10-year Treasury note in the past week to about 1.1 per cent, up from 0.9 per cent.

The speculation was fuelled by comments from several regional Fed bank presidents, including Raphael Bostic of the Atlanta Fed and Robert Kaplan of Dallas. Bostic said last week that he was “hopeful that in fairly short order we can start to recalibrate” the bond purchases. Bostic is a voting member of the Fed's policymaking committee this year.

Members of the Federal Reserve's Board of Governors, who carry particular weight on rate decisions, have stressed that any tapering of bond purchases won't occur for months at least. One of them, Richard Clarida, said last Friday that he thought the purchases would likely continue at least into next year. (AP)

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