Fed needs more economic data before tapering: Fed Evans
(Reuters) – The Federal Reserve will likely defer any decision to trim its massive bond buys until at least December, two top Fed officials suggested on Thursday, although a third Fed policymaker made no bones about her view that she opposes any such delay.
A budget battle in Washington that shut government offices for 16 days and brought the United States to the brink of default has injected uncertainty into the economy’s growth trajectory.
“We need more information about how the economy is proceeding, how we are going to weather the most recent government shutdown,” Chicago Fed President Charles Evans said in Madison, Wisconsin. “I think the most likely outcome is one where we continue to go for a couple of meetings to assess this.”
The Fed meets every six weeks to discuss policy, and next meets October 29-30 and December 17-18.
A growing number of economists say the Fed may have to wait until early next year before it sees sufficient strength in the U.S. economy to begin scaling back its bond-buying stimulus.
“It would be not worth your while for me to speculate about whether it’s going to be in December, January, March… we are going to have to see how things are going,” Evans said. “I believe this program should continue until we are confident that there has been a sustainable improvement in the labor market…It is not yet time to remove accommodation.”
Dallas Fed President Richard Fisher, whose views usually are the diametric opposite of the dovish Evans, said he will wait until the Fed’s December meeting before lobbying for a reduction to the Fed’s $85 billion-a-month bond-buying program.
“Given all this uncertainty it would be hard for me even to argue a change in course of monetary policy,” Fisher said in New York. “I don’t like the course we’re on… but my view will be to stay the course at the next meeting.”
