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20 Sep 2013
Fed's Bullard: QE taper possible in October
FXstreet.com (Barcelona) - St. Louis Fed chief James Bullard suggested in an interview for Bloomberg TV on Friday that the US central bank could begin slowing down its monthly asset purchases in October, if the US economy showed signs of improvement. His comments caused a slide in US stock futures.
Bullard said that market expectations for a QE taper in September were overdone and that personally he gave it a 60-40% probability. In any case, the reduction would be a small one.
He pointed out that inflation remained low, inducing the central bank to take its time with introducing policy changes. “Removing policy when inflation is below target is a concern and we need to have credibility when trying to get to a target,” he stressed, adding that too much importance was being attached to the employment numbers.
“So, we lasted a day before the markets start getting their hopes up again and now there's a big fat red bullseye on the October FOMC meeting,” Ryan Littlestone from Forex Live comments.
Bullard said that market expectations for a QE taper in September were overdone and that personally he gave it a 60-40% probability. In any case, the reduction would be a small one.
He pointed out that inflation remained low, inducing the central bank to take its time with introducing policy changes. “Removing policy when inflation is below target is a concern and we need to have credibility when trying to get to a target,” he stressed, adding that too much importance was being attached to the employment numbers.
“So, we lasted a day before the markets start getting their hopes up again and now there's a big fat red bullseye on the October FOMC meeting,” Ryan Littlestone from Forex Live comments.