Bullard: Taper decision should wait

The St. Louis Fed's Jim Bullard doesn't disappoint, arguing the FOMC needs more data before deciding whether to commence the QE taper.

Unemployment is down and payroll growth is generally strong, but other measures - labor force participation, employment to population, growth in hours worked - remain weak. Should the FOMC focus on NFP and UE or must a wider range of indicators be considered, he asks.

GDP growth has been pretty lame. Yes, the forecasts are optimistic, but Fed forecasts have been optimistic and wrong for years.

Then there's inflation - it remains below the 2% target and shows little sign of heading up to that level.

He suggests the start of the taper centers around the September meeting because a Bernanke press conference will follow, with no other press conference scheduled until December. By picking only certain FOMC meeting to follow up with a presser, the Fed has allowed to rise the perception that some meetings are more important than others and major policy decisions will only occur at certain meetings. All FOMC meetings should be ex ante identical, he argues (a press conference for each one - say it ain't so!).

Bullard speech.

Presentation slides.

The remarks gave only a temporary and small pop to stocks. The Dow (DIA -0.7%) remaining down more than 100 points.


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Comments (5)
  • winningtrader
    , contributor
    Comments (2459) | Send Message
    2 to 3 years from now we are still going to hear the same thing ... FED is thinking of tapering but some members less so than others ... the FED has become like a large bird nest with many vocal little birds trying to get the biggest insect from their parents (the politicians). The insect in this case is some big government job.
    14 Aug 2013, 03:54 PM Reply Like
  • Marco Mazzocco, CFA
    , contributor
    Comments (193) | Send Message
    The bond market is already tapering for them. Depending on how the data goes tomorrow, you could see 10yr get close to 2%.
    14 Aug 2013, 04:33 PM Reply Like
  • mobyss
    , contributor
    Comments (2641) | Send Message
    You mean 3%?
    14 Aug 2013, 05:19 PM Reply Like
  • Marco Mazzocco, CFA
    , contributor
    Comments (193) | Send Message
    yes 3%. typo. So far we're headed that way.
    15 Aug 2013, 09:42 AM Reply Like
  • june1234
    , contributor
    Comments (4484) | Send Message
    There's data and there's data. I recall a month ago or so a voting Fed member saying she was shocked at the amount of lifeguard and restaurant job openings went she stopped in at job fair in the DC area. Fed doesnt drink from the same water supply as the rest of the planet
    14 Aug 2013, 04:59 PM Reply Like
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