Fed’s Bullard Wants to See More Data Before Taking Action

Federal Reserve Bank of St. Louis President James Bullard said policy makers should wait for more data before deciding on “big action” to boost the economy.

“I would like to see some more data before taking really big action,” Bullard said in an interview today on Bloomberg Television from Jackson Hole, Wyoming. He said policy makers should consider changing their statement that interest rates are likely to stay low at least through late 2014 or reducing the interest the Fed pays banks’ on excess reserves.

Many Fed policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their July 31-Aug. 1 meeting released last week. Fed Chairman Ben S. Bernanke has an opportunity to update his policy outlook in a speech at the Kansas City Fed’s Jackson Hole symposium today at 10 a.m. New York time.

“The committee has talked about lowering interest rate on excess reserves,” Bullard said. “We have gone round and round on this issue. I kind of think this might be a time to try that out.”

Fed officials, who next meet Sept. 12-13, have offered differing policy views since their last gathering, with Federal Reserve Bank of Chicago President Charles Evans endorsing more easing and Atlanta’s Dennis Lockhart saying there are risks to moving “too aggressively.”

Low Rates

At its last meeting, the Fed repeated that interest rates are likely to stay “exceptionally low” at least through late 2014. It also said the Fed will “provide additional accommodation as needed to promote a stronger economic recovery.” In June, the Fed prolonged a program to extend the maturities of assets on its balance sheet.

“I do worry a little bit that we are facilitating debt buildup” by keeping interest rates low, Bullard said. “I don’t think anybody is intentionally doing that. It does take the pressure off” Congress and the president “to some extent.”

The central bank lowered interest rates almost to zero in December 2008 and since then has engage in two rounds of large- scale asset purchases totaling $2.3 trillion.

“We have been super aggressive in providing monetary stimulus,” Bullard said. “We have got plenty on the table.”

Bullard, who doesn’t vote on policy this year, was the first Fed official in 2010 to call for a second round of asset purchases. In speeches this year, he has said he sees no need for additional easing and has urged the FOMC to “pause” to assess developments.

Bullard, 51, joined the St. Louis Fed’s research department in 1990 and became president of the regional bank in 2008. His district includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net; Sara Eisen in New York at seisen2@bloomberg.net.

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Federal Reserve Bank of St. Louis President James Bullard

Scott Eells/Bloomberg

Federal Reserve Bank of St. Louis President James Bullard said, “I would like to see some more data before taking really big action.”

Federal Reserve Bank of St. Louis President James Bullard said, “I would like to see some more data before taking really big action.” Photographer: Scott Eells/Bloomberg

8:22

Aug. 31 (Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard talks about central bank monetary policy and the U.S. economy. He speaks from Jackson Hole, Wyoming, with Sara Eisen and Tom Keene on Bloomberg Television's "Surveillance." (Source: Bloomberg)

6:23

Aug. 31 (Bloomberg) -- Meredith Whitney, founder and chief executive officer of Meredith Whitney Advisory Group, talks about the impact of Federal Reserve policy on the U.S. economy and the banking industry. Whitney speaks from Jackson Hole, Wyoming, with Sara Eisen on Bloomberg Television's "Surveillance. Federal Reserve Bank of St. Louis President James Bullard also speaks. (Source: Bloomberg)