Fed Officials: Where They Stand on Tapering

August 9, 2013 03:09 AM

via a special arrangement with Informa Economics, Inc.

Fed bank presidents couching their views on economic performance

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

A series of Federal Reserve Bank presidents have laid out their views this week on when they see the tapering of the Fed’s asset purchases unfolding. Here’s a look at where these officials stand:

Cleveland Fed’s Sandra Pianalto: Not a voter in 2013, but to be in 2014

Scaling back the asset purchases by the US Federal Reserve would be backed by Cleveland Fed President Sandra Pianalto if the US jobs market continues to follow its current path. "In light of this progress, and if the labor market remains on the stronger path that it has followed since last fall, then I would be prepared to scale back the monthly pace of asset purchases," Pianalto said. However, Pianalto is not a voter on the FOMC nor did she give any timeline on when the tapering could start.

Pianalto, it was announced, will be retiring in early 2014, with a replacement expected to be named in early 2014.

Chicago Fed President Charles Evans: Voter in 2013; alternate in 2014.

Evans said he could not rule out the Fed starting the tapering of its asset purchase efforts as soon as the September FOMC meeting. However, he cautioned that just because the tapering begins, that does not mean the Fed will hike interest rates. Evans believes rates will stay static as long as inflation doesn’t become an issue.

Atlanta Fed President Dennis Lockhart: Not a voter in 2013 or 2014, but scheduled to be in 2015.

Lockhart told Market News International in an interview that he thinks the tapering start could unfold at any of the next three meetings. If second-half growth picks up and jobs growth is more in the 180,000 to 200,000 range, "I think with other fundamentals improving we probably are in a position to remove ... the extraordinary policy program over the medium term." However, he cautioned if the economy keeps muddling along it is not a foregone conclusion the tapering will indeed start.

Dallas Fed President Richard Fisher: Not a voter in 2013, but is in 2014.

Economic data is pointing to the Fed getting closer to taking action to taper their asset purchases, according to Fisher. "With the unemployment rate having come down to 7.4%, I would say that the [Fed] is now closer to execution mode, pondering the right time to begin reducing its purchases, assuming there is no intervening reversal in economic momentum in coming months." He said that he urged his colleagues at last week’s FOMC meeting to "make our first move this fall" but also noted the Fed likely had to "gingerly" remove the stimulus efforts.

St. Louis Fed President James Bullard: Voter in 2013. 

More economic data should come in for the second half of the year before the Fed makes its decision on tapering their $85 billion per month in asset purchases, Bullard said. He also urged caution over "taking policy action based on forecasts alone," admitting that he has been too optimistic about the economic recovery. "It is important to wait to see if better macroeconomic outcomes materialize in the months and quarters ahead," Bullard said.

Bottom line: Fed officials are clearly on the same page, with some minor differences. That is to be expected. But the key remains that US economic data has to continue to come in as the Fed expects and strengthen from the current readings in order to have the Fed act to start the tapering. In addition, two of the next three FOMC sessions have post-meeting press briefings from Fed Chairman Ben Bernanke and updated economic forecasts – the Sept. 17-18 and Dec. 17-18 sessions. The Oct. 29-30 meeting does not have those updates as a component.

The Fed could opt to time their tapering to mesh with the press conference settings to give Bernanke a chance to explain the moves as he did in the June session relative to setting the stage.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by QTInfo.com
Brought to you by Beyer