Three Federal Reserve officials weighed in on Friday on the question of when to reduce the U.S. central bank's bond buying, but their divergent views offered little clarity for investors trying to predict what will happen at a Fed meeting next month.
The comments by Atlanta Federal Reserve Bank President Dennis Lockhart, his St. Louis counterpart, James Bullard, and John Williams of the San Francisco Fed on CNBC television suggested U.S. monetary policymakers want to keep their options open headed into the much-anticipated meeting on September 17-18.
U.S. bond prices and, in recent days, currencies in some emerging markets, have fallen sharply as investors raised bets that the Fed will trim its $85-billion monthly asset-purchase program, which is meant to boost U.S. hiring and growth.
"I would be supportive in September as long as the data that comes in between now and then basically confirm the path we're on," Lockhart said.
"The key question is, do we have even at this moderate pace of growth a sustainable picture, something that's going to continue?" he asked. "Or is there risk that the economy gets knocked off its feet in some way?"
Lockhart, a centrist who does not have a vote on policy this year, added during a separate interview on Fox Business Network that he "wouldn't rule out September, but it could be later."
Bullard, who does have a vote and who has been sounding the alarm on low inflation readings, reiterated his view that the Fed need not rush to reduce the pace of quantitative easing, or QE3, in September.
"I don't think we have to be in any hurry in this situation," he said. "Inflation is running low, you've got mixed data on the economy, so I'd be cautious and I wouldn't want to pre-judge the meeting."
"I think we want to take our time, assess what's going on, before we make a move here," he said.
Such mixed messages are common from the Fed's 19 policymakers, and they reflected the noncommittal tone in minutes of the central bank's July 30-31 policy meeting.
The minutes, released on Wednesday, showed a few Fed officials thought then that it would soon be time to slow the pace of bond buying "somewhat," while others counseled patience.
Primary dealers surveyed just before that July meeting said they expected a $15 billion per month reduction in September, according to a poll published by the New York Fed on Thursday. They expected a $10 billion reduction in Treasury buys and a $5 billion trim to mortgage-bond purchases.
Williams, echoing a QE3-reduction plan first put forth by Fed Chairman Ben Bernanke in June, was mum on September but said the decision should hinge on economic data.
The Fed needs to see "positive signs of momentum and growth in job creation, and we need to see inflation continue to edge back up toward our 2-percent longer-run inflation goal," Williams said. "If the data continue to progress as we've seen, then I do agree that we should ... taper our purchases later this year."
The U.S. economy expanded at a tepid 1.4 percent annual rate over the first half of the year, and consumer prices as measured by the Fed's favored gauge rose just 1.3 percent in the 12 months through June.
Williams told CNBC he expected a "significant step up" in growth later this year and in 2014 as the drag from tight fiscal policy faded.
He also said the low level of inflation was a concern but he was comforted that inflation appears to be moving a bit higher, which he said supported the view that there were temporary factors holding it down earlier this year.
The three were speaking on the sidelines of a high-profile monetary policy conference in Jackson Hole, Wyoming, where many of the world's top central bankers meet annually. This year, however, Bernanke is not attending.
In June, Bernanke set off an abrupt and widespread market selloff when he said the Fed expected to trim QE3 later this year and end the program altogether around mid-2014, depending on how the economy progresses.
While U.S. growth is still tepid and the unemployment rate remained high at 7.4 percent last month, that rate is down from 8.2 percent a year earlier and economic data has been mostly encouraging in the last few months.
The Fed has kept interest rates near zero since 2008. It launched its latest round of bond-buying in September 2012.
(Reporting by Jonathan Spicer; Editing by Dan Grebler and Chris Reese)