Bullard Opposes More Fed Bond Buying

St. Louis Fed President says FOMC minutes released yesterday "are a bit stale," economy has picked up.

Federal Reserve Bank of St. Louis President James Bullard said the Federal Open Market Committee minutes released yesterday are no longer as relevant because the U.S. economy has picked up in the past month.

“The minutes are a bit stale,” Bullard said in a CNBC interview. “We have some data since then that is stronger.”

Bullard said he opposes a new asset-purchase program right now. In contrast, many Fed policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their most recent meeting released yesterday.

Fed Chairman Ben S. Bernanke, who last month said a third round of bond buying was an option, will update his policy outlook on Aug. 31 with a speech to the Kansas City Fed’s annual symposium at Jackson Hole, Wyoming.

“It would be unusual for the Fed to take action based on this data constellation,” Bullard said. U.S. equity markets are “looking at all-time highs.”

Bullard, who doesn’t vote on monetary policy this year, was the first Fed official in 2010 to call for a second round of asset purchases. In speeches this year, he has said he sees no need for additional easing and urged the FOMC to “pause” to assess developments.

The St. Louis Fed official said the he and other Fed policy makers were disappointed in growth of about 1.5 percent in the first half of the year. A resumption of 2 percent or greater growth seems likely in the second half, he said.

‘Good Enough’

“That’s not a great outcome but to me that is a good enough outcome to keep us on hold,” Bullard said on CNBC. Asked if “a major” program of buying assets, or quantitative easing, is warranted, he said, “I don’t think so.”

“But I think the committee has said and would be determined to act if things deteriorated further,” he said.

Bullard, who has said this year he expects the FOMC to begin tightening policy in late 2013, said he might need to push back his date for the first interest rate increases. “For right now I am sticking with it but we’ll see,” he said.

Fed officials have offered differing views this week, with Fed Chicago Bank President Charles Evans endorsing more easing and Atlanta Fed President Dennis Lockhart saying there are risks to moving “too aggressively” on problems that can only be fixed by fiscal policy.

“I don’t need to see any more data to know that I think we should have more accommodation,” Evans said to reporters today in Beijing, referring to the U.S. “I certainly would applaud anybody who takes action in order to strengthen their economies” around the world, including China, he said.

Moves Markets

Among Fed policy makers, Bullard, 51, has been viewed as a bellwether for investors. His speeches and interviews moved the two-year Treasury yield more than any other FOMC member last year, according to a Macroeconomic Advisers report released Jan. 27.

Bullard joined the St. Louis Fed’s research department in 1990 and became president of the regional bank in 2008. His district includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Some U.S. economic reports have exceeded expectations since the last FOMC meeting, with retail sales increasing 0.8 percent in July and companies hiring 163,000 workers in the same month, the most in five months. That’s helped push the S&P 500 to six straight weekly gains and to almost a four-year high.

 

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