Fed Would Trim Asset Purchases Only If Economy Strengthens, Bullard Says
St. Louis Federal Reserve President James Bullard
Tomohiro Ohsumi/Bloomberg
James Bullard, president of the Federal Reserve Bank of St. Louis.
James Bullard, president of the Federal Reserve Bank of St. Louis. Photographer: Tomohiro Ohsumi/Bloomberg
The Federal Reserve would reduce its planned purchases of $600 billion in Treasuries only after a substantial improvement in the U.S. economy, St. Louis Fed President James Bullard said.
“The economy would have to improve a fair amount before the whole committee would pull back on that,” Bullard said today in an interview on Bloomberg Radio’s “The Hays Advantage,” with Kathleen Hays. “I think that is a possibility, but it would depend on hard data that would force us to reassess where the economy is going in the future.”
The Fed on Nov. 3 said it would buy more Treasuries through June, expanding record stimulus to try to reduce 9.6 percent unemployment and keep inflation from dropping. Chairman Ben S. Bernanke is trying to boost growth after near-zero interest rates and $1.7 trillion in securities purchases helped pull the economy out of recession without bringing down joblessness close to a 26-year high.
Bullard said he favored a rule, similar to the Taylor rule for setting the federal funds rate, that would adapt the level of the Fed’s easing to incoming data on the economy and inflation. He said he didn’t favor setting a $600 billion asset purchase target, preferring a smaller number that would be adjusted at each Fed meeting, although he voted for the policy.
To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net; Kathleen Hays in New York at khays4@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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