No need to hurry on tapering because of low inflation: Fed’s Bullard
(Reuters) – The Federal Reserve should not rush a decision to scale back its asset 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 television.
Bullard, who at the Fed’s policy meeting last week voted in favor of maintaining the central bank’s monthly bond buying campaign at an $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 should not 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.
