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Bullard Says Tapering Bond Buying Is ‘On the Table’ Next Month

St. Louis Fed President James Bullard
Federal Reserve Bank of St. Louis President James Bullard said “deleveraging among households” is waning and the housing market has improved in the last 18 months. Photographer: Sam Hodgson/Bloomberg

Nov. 20 (Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard, a voter on policy this year who has backed record stimulus, said that a strong jobs report could increase the chance of a reduction in bond purchases next month.

“It’s definitely on the table, but it’s going to depend on the data,” Bullard said in a Bloomberg Television interview with Erik Schatzker. “A strong jobs report, I think, would increase the probability some for a December taper.”

When asked how he would quantify strong, Bullard said, “I’m going to leave it at strong.”

The Federal Open Market Committee plans to press on with $85 billion in monthly bond buying until seeing substantial improvement in the outlook for the labor market. While U.S. employers last month added 204,000 workers, the Fed probably won’t taper its purchases until a March 18-19 policy meeting, according to the median of 32 economist estimates in a Bloomberg News survey Nov. 8. The next meeting is Dec. 17-18.

Bullard also said he doesn’t anticipate that financial markets will react dramatically to a discussion of tapering.

“If we taper because we see a stronger economy, I think the markets will swallow that without a problem,” he said. “In the summer, we were talking about tapering but the data wasn’t coming in very well.”

To contact the reporters on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net; Steve Matthews in Atlanta at smatthews@bloomberg.net

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

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