Bullard Does Not Seem Ready to “Taper”

On Friday, after the publication of the July Employment report, Federal Reserve Bank of St. Louis President James Bullard, said the Fed should wait for evidence the labor market and economy are strengthening before tapering purchases. Moreover, he estimated that the Federal Reserve Committee should not remove accommodation in a context where inflation remains particularly low.


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“The committee needs to see more data on macroeconomic performance for the second half of 2013 before making a judgment on this matter.”
“The committee would not normally remove policy accommodation in an environment where inflation is below target and is projected to remain there.”


Bullard’s analysis is coherent to the extent that 3 (GDP, PCE inflation, PCE Core Inflation) of 4 the main economic indicators followed by the Federal Reserve are far away from the targets set at the June meeting.


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With the exception of the unemployment rate, it would be a stretch to say the incoming data has been “broadly inconsistent” with the June FOMC projections.


I’ll wait for the next feedback from other Fed members, however, in my opinion, there is no doubt that “tapering” will not start at the next Fed meeting (September 17-18).