Federal Reserve Bank of St. Louis President James Bullard said Fed officials will probably be careful about altering the pace of their reductions to bond buying because of a potentially significant impact on markets.
“If we move off our baseline, it’s going to have pretty big repercussions,” Bullard said today in an interview at Bloomberg’s headquarters in New York. “We’d be cautious in using that — it’s going to have to be a situation where you’re pretty sure things are moving off track.”
Fed Chair Janet Yellen yesterday signaled in testimony to the House Financial Services Committee that the bar is high for changing her predecessor’s policy strategy of trimming stimulus in “measured steps.” Fed officials in December announced a $10 billion tapering in monthly asset purchases, and repeated the move last month with a cut of the same size to $65 billion.
Only a “notable change in the outlook” for the economy would prompt policy makers to slow the pace of tapering to bond buying, Yellen said in Washington.