NEW YORK, Sept 20 Low readings on inflation mean
that the U.S. Federal Reserve can be patient on deciding when to
scale back its pace of asset purchases, a senior Fed official
said on Friday, cautioning that he would not back action until
price pressures picked up.
"While I expect inflation to rise during the coming
quarters, I want to see evidence of such an increase before
endorsing less accommodative policy action by the FOMC," James
Bullard, president of the St. Louis Federal Reserve, said.
The Federal Open Market Committee, the Fed's policy-setting
body, on Wednesday voted to continue to buy bonds at a monthly
pace of $85 billion.
Bullard, however, said the prospects for tapering would
harden if U.S. payroll and unemployment data recovered further.
"To the extent that these two important labor market
indicators continue to show improvement, the likelihood of
tapering policy action will continue to rise," Bullard said in
remarks prepared for delivery to the New York Association for
Bullard, a committee voter this year, supported the decision
on Wednesday not to alter the current pace of bond purchases.
The move stunned financial markets, which had expected a
modest adjustment that would have signaled the beginning of the
end to a phase of ultra-easy U.S. monetary policy that has
already lasted five years.