Federal Reserve Bank of Atlanta President Dennis Lockhart said he wants to see inflation accelerate toward the Fed’s 2% goal before the central bank reduces $85 billion in monthly bond purchases.
“I’d like to see some movement toward the target” before tapering, Lockhart said today in a radio interview. Inflation is “stable but too low” and a move up would “give me some confidence we are not dealing with some downside scenario that might develop.”
The Federal Open Market Committee at a March 18-19 meeting will probably taper its bond buying to $70 billion, according to the median of 32 economist estimates in a Bloomberg News survey Nov. 8. Their forecast followed a government report that employers last month increased payrolls by 204,000 workers, more than expected.
Lockhart said his consideration of tapering will be driven by data that “focus mostly on employment and inflation, both of which are pretty far from the mandate-consistent levels we are seeking.”
Policy makers on Oct. 30 decided
“The December meeting is one in which some discussion of tapering could well take place,” Lockhart said. While inflation will be an important consideration, the decision will not be based on “a single development.”
The FOMC began its third round of quantitative easing in September 2012 with monthly purchases of $40 billion in mortgage-backed securities, adding $45 billion in Treasury purchases in December.
The Fed repeated last month that inflation “has been running below the committee’s longer-run objective but longer term inflation expectations have remained stable.”
Inflation measured by the Fed’s preferred measure, the personal consumption expenditures index, rose 0.9% in September, below policy makers’ 2% target.
A former Georgetown University professor, Lockhart has led the Atlanta Fed since 2007. His district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi and Tennessee.
