Tags: federal reserve | james bullard | easing | stimulus

Fed's Bullard: $85 Billion a Month of QE Is 'Torrid Pace'

Monday, 04 November 2013 09:22 AM

The Federal Reserve shouldn't rush a decision to scale back its "torrid" $85-billion-a-month bond-purchase program because of low inflation, a senior U.S. central banker said on Monday.

"For me, you don't have to be in a hurry because of low inflation," St. Louis Federal Reserve President James Bullard told CNBC. "It's a very reasonable thing to do to substitute for the fact that you can't lower interest rates any further," he said.

"Eighty-five [billion dollars] is a torrid pace, I will give you that. And a trillion dollars a year is a torrid pace," Bullard said. "I'd rather get out it if we can, but I'd like to meet our goals."

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Bullard, who at the Fed's policy meeting last week voted in favor of maintaining the central bank's monthly bond buying campaign at the $85 billion monthly pace, said he wanted to see inflation heading back toward policy-makers' 2 percent goal before tapering bond buying.

Inflation has been running much closer to 1 percent, he noted.

The Fed held fire on deciding to begin reducing asset buying after a bitter partisan battle in Washington that led to a 16-day partial government shutdown and flirted with a devastating debt default.

A deal was eventually forged to reopen the government and raise the U.S. borrowing limit until early in the new year, meaning the fiscal showdown could resume in a matter of months.

Bullard said he did not think the shutdown in itself would do lasting harm to the economy, although he acknowledged that the political fighting had hurt confidence. But the Fed shouldn't wait for a permanent budget deal before taking policy action.

"I think we can't really wait for the political situation in Washington to be just right because, evidently, they could be bickering forever," he said.

He also played down the impact that the central bank's leadership transition would have on decision-taking, after President Barack Obama nominated Fed Vice Chair Janet Yellen to take over the helm from Ben Bernanke when his term expires at the end of January.

Yellen's appointment must be confirmed by the U.S. Senate.

"I don't think the committee would put very much weight on anything like that. It is a continuous process and it is a committee that is making the policy and they want to adjust at the right time," Bullard said.

He also said that he expected she would help ensure policy continuity once she was in charge.

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The Federal Reserve shouldn't rush a decision to scale back its torrid $85-billion-a-month bond-purchase program because of low inflation, a senior U.S. central banker said on Monday.
federal reserve,james bullard,easing,stimulus
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2013-22-04
Monday, 04 November 2013 09:22 AM
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