Fed's Williams: Small Changes in Economic Picture Won't Affect Tapering

Thursday, 20 Feb 2014 10:03 AM

By Dan Weil

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Data concerning the economy, including jobs, would have to shift markedly to cause the Federal Reserve to change the pace that it's tapering quantitative easing, says San Francisco Fed President John Williams.

"In my view, the hurdle is pretty high on changing the pace of the step-downs in our [bond] purchases that we started back in December," he told CNBC.

Williams isn't currently a member of the policymaking Federal Open Market Committee (FOMC).

The Fed cut the purchases by $10 billion a month at both its December and January meetings, leaving them at $65 billion.

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There has been some speculation that recent weak economic data, including small job gains in December and January, might lead the Fed to slow its tapering schedule.

But Williams sees signs of strength in the employment market. "What I'm looking for is steady improvement in the labor market generally, and we are seeing that in other series that the government follows, such as job vacancies and perceptions of the job market," he said.

"I really don't want to overreact to any specific piece of data and really look at what it means for the medium-term trend."

Meanwhile, Atlanta Fed President Dennis Lockhart said in prepared remarks Wednesday that the Fed will probably end quantitative easing in the fourth quarter, unless the economy unexpectedly stumbles, Reuters reports.

"As long as the outlook remains solid and does not deviate dramatically from the path we believe it's on, I would expect the tapering of asset purchases to continue over the balance of the year," he said. Lockhart isn't on the FOMC now either.

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