Tags: Lockhart | taper | shutdown | government

Lockhart Says Shutdown Vindicates Fed Decision Not to Taper

Thursday, 03 October 2013 03:21 PM

Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank’s September decision not to pare the pace of its bond buying was “wise” given the partial government shutdown that ensued.

“We avoided a potentially very awkward situation of reducing stimulus just on the eve of what now has developed,” Lockhart, who doesn’t vote on monetary policy this year, said to reporters today after introductory remarks at a conference in Atlanta. The decision to delay a taper in bond purchases “now is vindicated by the developments,” which resulted from a political impasse in Washington over the federal budget.

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The policy-setting Federal Open Market Committee last month unexpectedly refrained from reducing the pace of its $85 billion in monthly bond buying, saying it wants to see more evidence of lasting improvement in the labor market. While joblessness fell to 7.3 percent in August from 7.4 percent in July, the decline was attributable to discouraged Americans giving up on finding work.

The U.S. Department of Labor won’t issue the September payrolls report tomorrow as initially scheduled because of the partial government shutdown now in its third day. The release includes the unemployment rate and data on payroll employment.

“Less data is not helpful in gauging where the economy is and where it’s going,” Lockhart said. “So that would tend to make me somewhat more cautious.”

The U.S. Commerce Department also has suspended the release of economic data provided by its agencies. Reports on construction spending, factory orders, retail sales and gross domestic product are all issued by agencies within the department.

October Meeting

The Atlanta Fed chief said that, while he wouldn’t want to “rule out” tapering at policy makers’ meeting later this month, “this current circumstance is even compounding the murkiness of the situation that I perceived a few weeks ago.”

A meeting between President Barack Obama and congressional leaders yesterday failed to break the budget logjam that has led to the first shutdown since 1996.

If the government shutdown lingers into late October “we will still be looking at a very ambiguous situation,” Lockhart said. “It would be very hard to make a decision under those circumstances.”

Editor's Note: Weird Trick Adds $1,000 to Your Social Security Checks


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Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank's September decision not to pare the pace of its bond buying was "wise" given the partial government shutdown that ensued.
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2013-21-03
Thursday, 03 October 2013 03:21 PM
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