Bullard: Fed should take wait and see approach before tapering

BOSTON Fri Aug 2, 2013 12:47pm EDT

James Bullard, President of the St. Louis Federal Reserve Bank, speaks during an interview with Reuters in Boston, Massachusetts August 2, 2013. Bullard said on Friday that the U.S. economy is improving modestly but needs to gather more steam, while inflation remained too low for comfort, underscoring the debate within the central bank over when to scale back stimulus. REUTERS/Brian Snyder

James Bullard, President of the St. Louis Federal Reserve Bank, speaks during an interview with Reuters in Boston, Massachusetts August 2, 2013. Bullard said on Friday that the U.S. economy is improving modestly but needs to gather more steam, while inflation remained too low for comfort, underscoring the debate within the central bank over when to scale back stimulus.

Credit: Reuters/Brian Snyder

BOSTON (Reuters) - Federal Reserve forecasts have proved to be too optimistic in the past and the U.S. central bank should therefore take a 'wait and see' approach before deciding to taper bond purchases, a top Fed official said on Friday.

"The Committee needs to see more data on macroeconomic performance for the second half of 2013 before making a judgment on this matter," St. Louis Fed President James Bullard told a financial conference in prepared remarks.

Fed Chairman Ben Bernanke said last month the central bank would likely begin to scale back asset purchases later this year, from a current $85 billion monthly pace, so long as the economy evolves as expected.

However, Bullard said his own predictions for the strength of growth had proved too optimistic over the last several years, and emphasized he wanted to see real evidence of recovery.

"Given this experience, I think caution is warranted in taking policy action based on forecasts alone," he said.

(Reporting By Alister Bull; Editing by Andrea Ricci)

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