The US Federal Reserve could still scale back its massive bond buying program at an October meeting should data point to a stronger economy, St. Louis Fed President James Bullard said on Friday. October is a live meeting he told Bloomberg television.
The Fed surprised markets this week when policymakers decided not to taper the 85-billion dollars-per-month bond buying program, citing worries about the health of the world's biggest economy.
This was a close decision here in September, Bullard said, emphasizing the role that economic data has played and will continue to play in Fed decisions. But it was possible that data would come through that again changed the discussion around US economic growth, he said, referring to the Fed meeting on Oct 29-30.
I'm not saying it's going to happen, Bullard said, but the possibility existed. The dollar rose to a session high against the Yen on his comments.
Some analysts see no October pullback in bond buying because there is no post-meeting news conference currently scheduled. The Fed would likely use such a news conference to detail why and how it chose to make any policy changes.
But that can always change, Bullard said. Hints the Fed is looking for an exit from its so-called quantitative easing program have sent benchmark yields soaring more than 100 basis points since May.
Rates went up a lot over the summer, Bullard said. For many on the committee that was a surprise.
The Fed also needed to make sure that it did not lose its focus on the inflation half of its dual mandate, which also cites employment.
Price pressures have been low in the United States, a potential complication for the Fed as it seeks to exit its crisis-era extraordinary measures. Very low inflation scares policymakers because it raises the chances an economic shock - say, a meltdown in Europe or China - could tip prices and wages into a downward spiral known as deflation.
In February 2011, Bullard was named in a Blooomberg article as “a bellwether person” an “indicator of where the full committee (FOMC) is heading”. Macroeconomic Advisers named Bullard the FOMC second biggest mover of markets in 2010, behind Fed Chairman Ben Bernanke.
In January 2012, Macroeconomic Advisers named Bullard the biggest mover of markets in 2011, because he “had a larger market impact than any other FOMC member. His speeches and interviews moved the two-year Treasury yield by almost 17 basis points last year.” In 2010, 2011 and 2012, Bullard appeared numerous times on CNBC, including co-hosting “Squawk Box” and “Closing Bell”, as well as on CNN, Bloomberg Television and Fox Business.