BOSTON (Reuters) - July’s drop in the unemployment rate takes the nation closer to a 7 percent threshold outlined by Federal Reserve Chairman Ben Bernanke as the point around which the central bank would likely end bond purchases, a top Fed official said on Friday.
“It is definitely closer,” St. Louis Fed President James Bullard told reporters after government data showed the unemployment rate declining to 7.4 percent in July from 7.6 percent the month before.
“The chairman talked about a 7 percent ballpark figure for unemployment. He was thinking the middle of next year that we’d be around that number. The committee has not codified that or enshrined that in the statement. But as a kind of softer target, we’re definitely closer to that softer target,” Bullard said.
The Fed is currently buying $85 billion worth of bonds every month but Bernanke said in June it would likely begin scaling the program back later this year and end it around the middle of 2014, at which time unemployment would be around 7 percent.
Reporting by Alister Bull; Editing by James Dalgleish