Bullard says Fed ‘full steam ahead’ with bond purchases

Less Worried

Bullard said he is less worried than some private forecasters about a “spring swoon,” or a mid-year slowdown that has occurred during the past two years. Risks from the European debt crisis have waned during the past two years, so global conditions probably won’t impair growth, he said. Also, fiscal tightening may crimp consumer spending less than many economists estimate.

The St. Louis Fed chief said when it comes time to slow purchases, he favors reducing the pace by small increments in response to changes in the economy.

“I would be very comfortable moving in small amounts -- $10-or-$15 billion at a time,” Bullard said in the interview at the St. Louis Fed. “We are getting much closer” to the committee agreeing to a tapering approach, as indicated by Bernanke’s comments last month.

Small changes in bond buying probably won’t disrupt stock or bond markets, Bullard said. In contrast, a sudden halt in the buying could jolt investors, he said.

Compared to other policy makers, Bullard is viewed by investors as unusually influential, according to Macroeconomic Advisers LLC. His speeches and interviews prompted a bigger increase in bond yields than any other Fed official last year, according to a March 8 report by the Washington-based firm.

Exceeded Expectations

Fed Governor Daniel Tarullo said today that while some economic data have exceeded expectations, he would like to see more consistent job growth before he can support curbing the central bank’s $85 billion monthly pace of bond buying.

“At the very least, what I’d like to see is some good healthy peaks that have job creation well above the rate of new entrants into the labor market, followed not by valleys that take back some of that progress but at the very least by a nice plateau that can be the basis for some more peaks later,” Tarullo said today in a CNBC interview.

Bloomberg News

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