Fed's Bullard: Decision not to taper 'enhanced' Fed's credibility

NEW YORK Fri Sep 20, 2013 2:55pm EDT

James Bullard, President of the St. Louis Federal Reserve Bank, speaks during an interview with Reuters in Boston, Massachusetts August 2, 2013. 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.

Credit: Reuters/Brian Snyder

NEW YORK (Reuters) - The Federal Reserve's surprise decision to maintain its monthly bond purchases improved rather than damaged the U.S. central bank's credibility, a top Fed official said on Friday.

"I think it enhanced our credibility in the sense that it showed we really are paying attention to data and not on some automated program to cut QE to zero," St. Louis Fed President James Bullard told reporters following a speech in New York.

The Fed's decision on Wednesday surprised financial markets, which had expected the Fed to trim its purchases this month. Policymakers said this week they needed to see more improvement in the U.S. economy.

Kansas City Fed President Esther George, who was the lone dissenter against the decision, said Friday the Fed had damaged its credibility by deciding not to act.

(Reporting by Steven C. Johnson; Editing by Leslie Adler)

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