Economy Not Strong Enough Yet to Taper QE: Piegza

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Oct. 9 (Bloomberg) -- Lindsey Piegza, chief economist at Sterne Agee & Leach, discusses the outlook for Federal Reserve monetary policy. She speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Likely to taper bond purchases this year.

Has the economy improved enough for tapering to begin?

I don't think that it has.

I think the uneven data is really the underlying reason why fed officials remain consistent in their bond purchase program.

We have not seen the steady type of improvement that fed officials want to see in order to warrant a rollback in bond purchases.

I want to highlight the word steady.

We only have one employment report between now and the next fomc meeting.

One data point does not make a trend nor does it imply a steady improvement.

I just don't think there is enough justification out there.

Lindsay, what you make of the revelation that there was a lengthy policy debate among the fed officials over whether the economy had improved enough to begin tapering and that several members said the decision to hold off was "a relatively close call wesco -- call?" i would expect a lot of conversation.

Again, i would have expected a lot of conversation to look into detail.

Although the fed has made labor data the data to watch, they are also looking at it in the context of the broader economy.

What we have seen is a just the position between -- juxtaposition between strength and weakness.

That is where we see these fed officials sitting on the fence in determining whether or not it was appropriate.

During remarks today at the white house, janet yellen says more needs to be done to strengthen the u.s. economy.

What actions might she take it she is confirmed to be the next fed chairman?

When she says more, i think she means more of the same in terms of continuing to support the economy with $85 billion in purchases on a monthly basis.

When we talk about more, i think she means continuing what we have already seen.

Unless we see the economy take a considerable misstep, i don't think there would be enough momentum to justify a wrapup and purchases.

-- ramp up in purchases.

Let's talk about forward guidance.

How will dr.

Yellen communicate with markets?

Will it be different from chairman bernanke's methods?

I don't think so.

I think yellen will continue the legacy of the bernanke fed, keeping transparency at the forefront of fed communication.

Really allowing the market to understand the motivation ahead of any fed adjustment and policy.

You have written that if dr.

Yellen became fed chairman, she would continue ben bernanke's legacy.

When does she begin to chart her own legacy?

I think that is one of the most exciting ideas, with the first fed chairman being a woman.

She has arguably the most powerful financial position in the world.

There is certainly a monumental occasion.

When it talks about building her own legacy, i think it will be a very smooth transition from bernanke's policymaking to yellen's. it will be a continuation of his legacy as she begins to build her own.

Lindsay piegza, chief economist at stern agee, good to

This text has been automatically generated. It may not be 100% accurate.


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