ST. LOUIS — St. Louis Federal Reserve Bank President James Bullard Thursday said an October start to tapering the central bank's $85 billion a month in asset purchases has become less likely because of the partial federal government shutdown and resulting the lack of economic data.
"As it turns out October is looking less likely for a decision on tapering because of the government shutdown and lack of data we would have otherwise received," he told reporters during a St. Louis Fed research conference.
"We cited that fiscal uncertainty was a risk and that uncertainty has materialized. That makes it less likely that we will make a decision to taper in October. I wouldn't want to prejudge the meeting but it has changed the odds," Bullard, who is a voter on the Federal Open Market Committee this year, added.
Bullard also said, however, that "monetary policymaking has to go on regardless of data availability."
Bullard has repeatedly emphasized the fact that inflation is below the Fed's 2% target, and he did so again Thursday.
"We're still running only a little bit above 1%. If the economy is indeed weaker between now and the end of the year that would seem to suggest we will see a pickup in inflation," he said, "I think we can afford to be patient with our QE program until we see inflation come closer to target."
"One of the things we succeeded at our September meeting was in showing the world that this is data dependent," he went on to say. "I don't want to throw that away in the media scrum here."
On the transition from Fed Chairman Ben Bernanke to Janet Yellen, who President Barack Obama nominated to succeed him, should not cause much of a shift in Fed policy, Bullard said:
"The key word for a Yellen chairmanship will be continuity. She's been at the middle of the action during the crisis and since the crisis."
Bullard also repeated a previous recommendation that the Fed chairman hold a press conference after every FOMC meeting. He said he had made that suggestion to Bernanke and would press it with Yellen if she is confirmed.
With the U.S. a week away from bumping up against the debt ceiling, Bullard said it's important that Congress and President Obama take action.
"It's just imperative that we not go in this direction and get into a situation where we are not paying some of our bills," he said.
"We have great position as a reserve currency in the world. We have a reputation which is strong enough to make us a safe haven, which has helped us enormously in the last five years. There's no reason to put that reputation at risk," Bullard said.
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