Fed's Evans Wants More Signs of Growth Before Taper

Friday, 06 Dec 2013 01:13 PM

 

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A top Federal Reserve official said on Friday he was "open-minded" to the idea of reducing the U.S. central bank's bond purchasing stimulus program this month, but he would like to see a stronger labor market first.

Asked whether strong job creation in November put a tapering of bond purchases on the table at this month's Fed meeting, Chicago Fed President Charles Evans said the data showed the economy was moving in the right direction.

U.S. employers increased payrolls by 203,000 new jobs in November, the Labor Department said earlier on Friday, a number that outstripped forecasts for 180,000 and brought the unemployment rate down to a five-year low of 7.0 percent.

"I'll be open-minded," Evans said in an interview with Reuters Insider. "Everything else (being) equal I would like to see a couple of months of good numbers, but this was improvement."

Evans is a voting member on the Fed's policy-setting committee this year and has been an outspoken advocate for the institution's efforts to nurse the economy back to health following the 2007-09 recession.

He reiterated his view that the Fed should provide more clarity about the future path of interest rates, which could compensate for an eventual tapering of bond purchases.

One way to do this, he said, would be for the Fed to promise not to raise interest rates until the jobless rate falls to 6 percent. Currently, the Fed has pledged to keep rates near zero at least until unemployment hits 6.5 percent.

If policymakers lowered the threshold at the same meeting in which they reduce bond purchases, he said "financial markets would view this as neutral, and that would be the right case, maintaining the same level of accommodation."

© 2014 Thomson/Reuters. All rights reserved.

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