(Bloomberg) -- The U.S. Treasury's decision not to extend the Federal Reserve's emergency lending facilities past their year-end expiry is disappointing, though it doesn't necessarily mean the central bank needs to add to monetary stimulus when it meets next month, Chicago Fed President Charles Evans said.
The lending facilities, rolled out earlier this year in response to the onset of the pandemic, are providing a helpful backstop for financial markets, Evans said in an interview Friday on CNBC television.
“That backstop role might be important for quite some time, so it's disappointing,” he said. “The virus spread is increasing, so there are risks from that.”
On Thursday, outgoing Treasury Secretary Steven Mnuchin published a letter sent to Fed Chair Jerome Powell seeking the return of money allocated by Congress to fund the programs, which are available to midsize and large companies as well as state and local governments. The Fed quickly issued a statement urging that “the full suite” of measures be maintained into 2021.
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Fed officials next meet Dec. 15-16 to discuss monetary policy. Fed watchers increasingly expect them to announce changes to their bond-buying program to provide more stimulus as the pandemic worsens and the economic outlook deteriorates. Currently, the central bank is buying $120 billion of Treasuries and mortgage-backed securities each month.
Evans said policy makers didn't necessarily need to take such action in December.
“We are in a pretty good place at the moment to sort of see how everything is going to play out,” Evans said. “I'm really looking at sort of the spring for when we have a better assessment of the labor market dynamics and the momentum that we are going to see, or if there is really a need for more. But we obviously can do more with enhanced asset purchasing.”
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