The recovery in key areas of the US economy is not sufficient enough for the Federal Reserve to start pulling back on its aggressive stimulus program, a top central banker said Monday.

While the Fed has begun to consider when to taper its massive bond-buying program, New York Fed President John Williams told reporters the economy has not made the "substantial progress" required for it to act.

The US economy shed more that 20 million jobs last year amid the pandemic, and still has not recovered 6.8 million of those. Policymakers have stressed that they will wait for more improvements before acting.

"I'm very focused on substantial further progress" on increasing employment and inflation, Williams told reporters.

"It's really about achieving our maximum employment and two percent inflation goals... and clearly right now, we have not achieved that," he said.

The Fed cut the benchmark lending rate to zero in the early weeks of the pandemic and has been buying $120 billion a month in bonds -- $80 billion in US Treasury debt and $40 billion of agency mortgage-backed securities.

The Federal Reserve wants to see "substantial progress" on US employment and inflation before reducing its bond purchases
The Federal Reserve wants to see "substantial progress" on US employment and inflation before reducing its bond purchases AFP / Angela Weiss

"In terms of thinking of potentially adjusting asset purchases, we've set a very clear marker," Williams said.

He noted there has been "strong movement" in employment and inflation data but "this is a time of very high uncertainty" and it's too soon to judge the economy's progress, Williams said.

Unemployment has fallen to 5.9 percent but remains well above the pre-pandemic level, while year-over-year consumer inflation jumped five percent in May. Data for June are due out Tuesday.

Williams and Fed Chair Jerome Powell have downplayed the recent spike in inflation, blaming transitory issues like the uneven reopening of the global economy and supply bottlenecks for most of the increases.

But in their last policy meeting in June, central bankers acknowledged their surprise at the size of the price jump.

They said they will be prepared to pull back on their bond buying in response to "unexpected economic developments," including if the US economy reaches full employment and inflation climbs over two percent faster than anticipated.