From the WSJ's Real Time Economics:
Tapering is all the rage these days when it comes to the Federal Reserve’s
unconventional $85 billion-a-month bond-buying programs. Minutes from
the Fed’s latest policy meeting in March showed a robust internal debate
about exactly when the Fed should begin to gradually reduce the amounts
of its monthly purchases of Treasury debt and mortgage-backed
securities. But it’s clear a consensus has emerged that the central bank
will indeed reduce the pace of its monthly purchases before stopping
the programs altogether.
Since the March meeting, Fed officials have had to confront a jobs
report that was far worse than expected and some other disappointing
data, including falling consumer sentiment at home and weak economic
growth in China — all of which could impact the Fed’s decision-making
process about tapering its bond-buying programs.
Here’s a roundup (in no particular order) of what Fed officials have
said on the subject since March 20, when the last policy meeting wrapped
up.
Fed Chairman Ben Bernanke: In the press conference following the end of the March policy meeting,
Mr. Bernanke emphasized that officials could decide to “vary the pace
of purchases as progress is made toward its economic objectives or if
its assessment of the efficacy and costs of the program changes.” He
stressed that the FOMC wouldn’t change the rate of its bond purchases
frequently, and it would do so based on “broad-based movement in a range
of indicators as well as improvement in output and labor demand.”
“But when we see that the condition or the situation has changed in a
meaningful way, then we may well adjust the pace of purchases in order
to keep the level of accommodation consistent with the outlook, and,
secondly, to help provide the markets with some sense of progress, how
much progress is being made so that it can make better judgments,” Mr.
Bernanke said. He also emphasized that the Fed could decide to dial its
purchases back up if the job market was to weaken.
Janet Yellen, vice chairwoman of the Fed board, said in an April 4 speech
endorsed a tapering strategy as a way to ease the end of the Fed’s
easy-money policies. In my view, adjusting the pace of asset purchases
in response to the evolution of the outlook for the labor market will
provide the public with the information regarding the [Fed's] intentions
and should reduce the risk of misunderstanding and market disruption as
the conclusion of the program draws closer,” she said, though she did
not offer a specific timeline for when the Fed would start slowing its
pace of purchases....MORE
