Federal Reserve Chairman Jerome Powell faces a tough question when he approaches the podium on Wednesday: is it a better strategy to provide more or less communication on the Fed’s asset purchase program?

On interest rate policy, the Fed is expected to hold rates at near-zero as the economic focus shifts to the vaccine rollout and President Joe Biden’s efforts on further stimulus.

“We expect little news from the FOMC meeting, with the FOMC hesitant to show much pessimism about current growth or too much optimism about the impacts of vaccines or additional fiscal policy,” UBS Global Research wrote in a Jan. 22 note.

With few expected changes to the policy statement, Fed watchers will be fixated on any commentary from Powell on the future of asset purchases under the so-called quantitative easing program.

The Fed’s latest guidance, from its December policy-setting meeting, committed to buying at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress” is made on the recovery.

But the Fed has not defined what would constitute “substantial further progress,” and Grant Thornton Chief Economist Diane Swonk wrote on Jan. 24 that a lack of clarification is the reason for why longer-term borrowing costs have increased over the course of January.

“Market participants are bracing for what could be a surprise slowdown in the pace of asset purchases,” Swonk wrote.

Mixed signals

But some Fed officials have been eager to look ahead to the Fed’s plans on winding down quantitative easing.

Atlanta Fed President Raphael Bostic said earlier in the month that there is the possibility that the economy improves enough this year to a point where he could “support pulling back and recalibrating a bit of our accommodation.”

But Philadelphia Fed President Patrick Harker said he did not see a case for “paring that back right now, or in the near future.”

The mixed signals may lead to a communication challenge for Powell, who will want to avoid then-Fed Chairman Ben Bernanke’s blunder on asset purchases that led to the “taper tantrum” of 2013.

Powell appears to be leaning toward a less-is-more approach on communication.

The Fed chair insisted that the economy is still “far” from the central bank’s goals, adding that he could offer more detail on the Fed’s plans for asset purchases when “clear evidence” points to progress.

“We will communicate very clearly to the public and we’ll do so, by the way, well in advance of active consideration of beginning a gradual tapering of asset purchases,” Powell said on Jan. 14.

At the first meeting of 2021, the cast of FOMC voters will also take on a new look. Bostic will take on one of the four rotating voting seats, alongside Chicago Fed President Charles Evans, Richmond Fed President Thomas Barkin, and San Francisco Fed President Mary Daly.

Christopher Waller will also be a new face on the committee, participating in his first FOMC meeting as a Fed governor since joining the central bank’s Board of Governors on Dec. 18.

Here’s what each Fed official said about quantitative easing since the last FOMC meeting on Dec. 16:

Fed Chairman Jerome Powell (voter): “We’ll let the world know. We will communicate very clearly to the public and we’ll do so, by the way, well in advance of active consideration of beginning a gradual tapering of asset purchases.” (Remarks at Princeton webinar, Jan. 14)

Fed Vice Chairman Richard Clarida (voter): “Right now, I think maintaining the current pace of purchases throughout the remainder of this year is my expectation.” (Remarks at Council on Foreign Relations, Jan. 8)

Fed Vice Chairman Randal Quarles (voter): No public remarks on QE

Fed Governor Lael Brainard (voter): “Even under an optimistic outlook, it will take time to achieve substantial further progress. Given my baseline outlook, I expect that the current pace of purchases will remain appropriate for quite some time.” (Remarks at Canadian Association for Business Economics, Jan. 13)

Fed Governor Michelle Bowman (voter): No public remarks on QE.

Fed Governor Christopher Waller (voter): No public remarks on QE.

Boston Fed President Eric Rosengren: “We’re going to continue to do that until the economy is on a more solid footing, so I expect it to be a little while before we’re even talking about tapering on our purchases.” (Remarks at Greater Boston Chamber of Commerce, Jan. 12)

New York Fed President John Williams: No public remarks on QE

Philadelphia Fed President Patrick Harker: “I don’t see us paring that back right now, or in the near future. I could see potentially that occurring at the very end of 2021 or early 2022, but it is all going to depend on the course of the economy which will depend on the course of the virus.” (Remarks at Philadelphia Business Journal webinar, Jan. 7)

Richmond Fed President Thomas Barkin (voter): “We’ve given outcome guidance not date guidance. So I couldn’t tell you a date...there are scenarios certainly where we see a strong recovery and unemployment and inflation, but there are lots of scenarios where we don’t.” (CNBC interview, Jan. 11)

Atlanta Fed President Raphael Bostic (voter): “I do think there is some possibility that the economy could come back a bit stronger than some people are expecting. And if that happens, I am prepared to support pulling back and recalibrating a bit of our accommodation.” (Remarks at Rotary Club of Atlanta, Jan. 11)

Chicago Fed President Charles Evans (voter): “It likely will take years to get average inflation up to 2%, which means monetary policy will be accommodative for a long time. This translates into low-for-long policy rates, and indicates that the Fed likely will be continuing our current asset purchase program for a while as well.” (Speech at American Economic Association Annual Meeting, Jan. 5)

St. Louis Fed President James Bullard: “This is an uncertain situation...I think it’s good to plan ahead and it’s good to try to anticipate but I don’t want to put specific dates on things at this point.” (Reuters interview at Reuters Next, Jan. 13)

Minneapolis Fed President Neel Kashkari: No public remarks on QE.

Kansas City Fed President Esther George: “[The committee] will continue to increase its holding of Treasuries and MBS by at least the current pace until substantial further progress has been made on its employment and inflation goals. Overall, the outlook is for monetary policy to remain accommodative for some time.” (Remarks at Central Exchange, Jan. 12)

Dallas Fed President Robert Kaplan: “Sometime later next year we should at least be beginning discussions about the thought of tapering.” (Remarks at Dallas Fed town hall, Jan. 11)

San Francisco Fed President Mary Daly (voter): No public remarks on QE.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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