While labor markets have made "meaningful progress" since quantitative easing began, inflation remains below the 2% target set by the Fed, and with "limited experience with asset purchases," Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto, said "it pays to be cautious."

"In my view, we have accumulated meaningful progress in labor markets since the program began; on net, employers have created about 180,000 jobs per month," Pianalto told an Ohio Housing Conference, according to prepared text released by the Fed. "At the same time, inflation has been running below the Committee's longer-run objective of 2 percent."

But, she noted, the latest employment report was mixed, with the unemployment rate dropping to 7.2% from the 8% range it was in when the program started in September, but only 148,000 jobs were created, "fewer than we would expect to see in a labor market firing on all cylinders."

Federal fiscal retrenchment in the past year "slowed momentum in economic growth, which may impact employment growth in the coming months," Pianalto said.

"At last week's meeting, the FOMC described the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy," she said. "However, the FOMC decided to await more evidence that the recovery's progress will be sustained before scaling back the pace of asset purchases. My hope is that the economic recovery will accelerate so that the Committee gains the reassurance it needs to begin winding down the program. As I have said in the past, we have limited experience with asset purchases so it pays to be cautious, especially in this uncertain economic environment. While to date the risks have mostly remained theoretical, I remain convinced that we need to be cautious in our expansion of asset purchases. The FOMC is constantly weighing the known benefits of asset purchases with their potential costs."

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