The St. Louis Fed President and QE3-ophile‘s story is there’s still not nearly enough data to justify the dreaded taper, and he’s sticking to it. Do not ask him to be more specific for at least a few more months—or quarters.
Mr. Bullard listed the degree of improvement in the jobs market, growth of real gross domestic product, the level of inflation and the size of the Fed’s balance sheet as four elements Fed officials are looking at as they decide when to start pulling back on the bond-buying program. Known as quantitative easing, the program aims to push down long-term interest rates, spurring investment, hiring and spending.
“It is especially important to see if better macroeconomic growth materializes in the months and quarters ahead, and whether inflation naturally returns toward target,” he said. Inflation has been running at about 1%, well below the Fed’s 2% target and has been a particular concern for Mr. Bullard.
He noted that recent economic growth has been weak, with real gross domestic product having averaged about 1% over the past three quarters, but added that recent data indicate the second quarter may turn out to have grown more quickly than the first-cut data indicated.
Fed’s Bullard: Need More Data Before Deciding to Scale Back QE [WSJ Real Time Economics blog]