Fed Looking for Four Straight 200,000 Payrolls

Federal Reserve will keep buying bonds until job growth averages 200,000 or more for four months in a row, according to two former Fed economists.

The Federal Reserve says it will keep buying bonds until the labor market has “improved substantially,” without defining the phrase. Officials may have adopted a threshold nevertheless, say two former Fed economists.

Chairman Ben S. Bernanke needs to see four months of job growth averaging at least 200,000 to justify reducing the pace of asset purchases, according to Vincent Reinhart, a former director of the Fed’s Division of Monetary Affairs. Roberto Perli, a former researcher in the division, said the central bank would need to see that pace “through the summer.”

‘Still Possible’

Some economists say the Fed’s threshold for tapering may be lower. Today’s job gain “is probably good enough, but they need more evidence that this is sustainable,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York and the top payrolls forecaster for the past two years, according to data compiled by Bloomberg. “If we see a couple more months like May, then I think tapering in September is still possible.”

‘Step Down’

“If we see continued improvement and we have confidence that that is going to be sustained, then we could in—in the next few meetings—we could take a step down in our pace of purchases,” Bernanke, 59, said in response to a question.

Page 1 of 3

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Advertisement. Closing in 15 seconds.