WASHINGTON — St. Louis Federal Reserve Bank president James Bullard late Monday emphasized that officials at the central bank have yet to decide on whether more action is needed to support the sluggish U.S. economic recovery, noting that the Fed has already implemented an aggressive monetary policy.
The policymaking Federal Open Market Committee meets Sept. 20-21, and “I have little doubt that, as always, an intense and spirited discussion about the course of future monetary policy will occur,” Bullard said in opening remarks at the St Louis Fed’s “Dialogue with the Fed: Beyond Today’s Financial Headlines.”
The growing belief in the financial markets and among many economists is that the dismal August jobs data made it increasingly likely the FOMC will announce another round of quantitative easing after it meets, but Bullard cautioned against that assumption.
“Let me stress that no decision has been made on this difficult question,” he said.
While the stall in jobs creation has increased worry that the United States is heading towards another recession, Bullard said he thinks the most likely path for the economy going forward “is one of modest, albeit unspectacular, growth and that the chances of recession are only modestly higher than they were earlier this year.”
“And, while disappointing economic performance certainly makes the case for an aggressive monetary policy, the FOMC has in fact provided that aggressive policy,” he added.
Bullard serves as a bellwether of the majority thinking on the FOMC. He noted that the Fed’s near-zero rate policy has been supplemented with the additional promise to keep the rate near zero at least through the middle of 2013.