Lockhart on Taper: So Far, So Good
December brought with it a taper to the Federal Reserves $85 billion per month bond-buying stimulus program. The taper cut $10 billion from the program, basing its timing on certain positive indicators that led the Fed to believe it was ready for the move. Now, according to the Wall Street Journal, the debate has changed from whether or not to initiate the taper to whether or not to continue it. Fed President, Dennis Lockhart is in favor of a continued decrease in quantitative easing.
“If the positive outlook I’ve outlined plays out, I would support similar tapering steps over the course of this year,” said Lockhart, reports the Wall Street Journal, as he noted the growth that is expected for this coming year. It’s largely expected by analysts that the taper will continue, though that could change if the economy shows continued reduction in the rate of growth as it did for job increases in December.
Lockhart proves to be a voice of comfort and moderation, promising that the Fed will have a “very accommodative” position as to policy, “appropriately so,” he said, according to the Wall Street Journal. “It’s reasonable to expect further progress on the employment front,” said Lockhart, but “while we’ve made substantial progress, we are far from a satisfactory situation.”
Lockhart voiced concerns over inflation rates, saying it currently sits below the 2 percent Fed goal. He also noted that the current 6.7 percent unemployment rate, which has shown heavy improvement, might lead to overconfidence on the state of the economy that does not reflect the reality of the situation.
Even with such concerns though, he spoke positively as to the taper, and the growth expected in 2014. “We are entering this year on a more solid economic footing. I think the weight of uncertainty holding back the economy has diminished,” said Lockhart, according to the Wall Street Journal.