US fiscal uncertainty may delay QE3 tapering: Fed official

The lingering U.S. fiscal uncertainty brought by the short-term fiscal deal to fund the government and raise the debt ceiling may delay the Federal Reserve's plan to taper off its massive bond-buying program, the so-called QE3, for a couple of months, a senior Fed official said on Monday.

"It's very difficult to feel confident in December given we're going to repeat part of what just took place in Washington," Charles Evans, Federal Reserve Bank of Chicago, said during an interview with CNBC.

Wrapping up weeks of bitter fiscal fight, U.S. Congress on Oct. 16 passed a legislation to end the government shutdown and raise the government's debt limit. The temporary deal would lift the debt ceiling through Feb. 7, and fund the government through Jan. 15, which does not resolve the fundamental divide between Republicans and Democrats on spending and deficits.

Business people were still concerned about how the fiscal negotiations between Republicans and Democrats are going to play out, he said.

"I think we need a couple of good labor reports and evidence of increasing growth" before starting to scale back the QE3, he stressed.

The Fed is now purchasing longer-term government debt and mortgage-backed securities at a pace of 85 billion U.S. dollars per month. The Fed last month announced to keep its monthly pace of bond purchases unchanged to stimulate the economy, citing U.S. fiscal policy as an uncertainty hanging over the economy.

Evans is currently a voting member of the Federal Open Market Committee (FOMC), the Fed's powerful interest rate setting panel.