The Federal Open Market Committee is closer to achieving its policy goals than it has been since 2009, Federal Reserve Bank of St. Louis President James Bullard said Friday.
Yet, monetary policy remains highly accommodative because labor markets aren't fully recovered and inflation is low, Bullard said.
With inflation and unemployment rates improving, the FOMC's taper has "proceeded smoothly so far" this year after a "taper tantrum" following "perceptions of Fed actions" in June 2013, he told the Arkansas Bankers Association, according to information released by the Fed. Actually tapering did not start until December.
Two explanations are possible for the different responses, Bullard said, "One interpretation is that as of June 2013, it was premature to argue that the U.S. economy was strong enough to pull back on asset purchases. As of December 2013, better growth and employment data justified the taper decision."
Weak first quarter GDP, with revisions expected to be downward, is not of concern to Bullard, who attributed the drop to wicked winter weather, and noted "forecasts for the remainder of the year are strong."
