Fed officials vague on when to trim U.S. stimulus

Fri Aug 23, 2013 10:25am EDT
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By Jonathan Spicer

(Reuters) - Three U.S. Federal Reserve officials weighed in on Friday on the key question of when to reduce the central bank's bond buying, but their divergent views offered little more clarity for investors trying to predict what will happen at a Fed policy meeting next month.

The comments by Atlanta Fed President Dennis Lockhart, his St. Louis counterpart, James Bullard, and John Williams of the San Francisco Fed all suggested U.S. monetary policymakers want to keep their options open headed into a much-anticipated meeting in Washington on September 17-18.

U.S. bond prices and, in recent days, currencies in some emerging markets, have fallen sharply as investors increasingly expect the Fed will trim its $85-billion monthly asset-purchase program, which is meant to boost U.S. hiring and growth.

"I would be supportive in September as long as the data that comes in between now and then basically confirm the path we're on," Lockhart said on CNBC television.

"The key question is, do we have even at this moderate pace of growth a sustainable picture, something that's going to continue?" he asked. "Or is there risk that the economy gets knocked off its feet in some way?"

Lockhart, a centrist who does not have a vote on policy this year, added during a separate television interview that he "wouldn't rule out September, but it could be later."

Bullard, who does have a policy vote and has been sounding the alarm on low inflation readings, was also on television reiterating his view that the Fed need not rush to reduce the pace of quantitative easing, or QE3, in September.

"I don't think we have to be in any hurry in this situation," he said.   Continued...

Dennis Lockhart, President, Federal Reserve Bank of Atlanta, takes part in a panel discussion titled "Twist and Shout: The Limits of U.S. Monetary Policy" at the Milken Institute Global Conference in Beverly Hills, California May 1, 2012. REUTERS/Danny Moloshok