WASHINGTON – A Federal Reserve voting member believes the Fed’s decision to announce details about when it would trim its bond-buying program was “inappropriately timed,” according to a statement posted by his staff Friday.
St. Louis Federal Reserve Bank President James Bullard said the Fed should have waited for more “tangible signs” that the economy was strengthening and inflation was closer to the Fed’s 2 per cent target.
Bullard dissented from the policy decisions made during the Fed’s two-day meeting, which concluded Wednesday. The regional bank posted an explanation of Bullard’s objection Friday on its website.
After the meeting, Chairman Ben Bernanke said during a news conference that the Fed would likely slow its $85 billion-a-month program later this year and end it next year if the economy continued to strengthen. The purchases have helped keep long-term interest rates at record lows.
Bernanke was authorized during the meeting to make the announcement.
Bullard’s objection was in part because he didn’t agree with the timing of that decision. He also wanted a stronger commitment from the Fed to keep inflation from falling too low. Prices have risen less than 1 per cent over the past 12 months, according to the Fed’s preferred price gauge. That’s below the Fed’s target.
“President Bullard believes that to maintain credibility, the (Fed) committee must defend its inflation target when inflation is below target as well as when it is above target,” according to the statement on the St. Louis Fed’s website.
The Fed policy decisions were approved at the end of the meeting on a 10-2 vote.
Esther George, president of the Kansas City Federal Reserve Bank, was the other member to dissent. She objected for the fourth time this year, again voicing concerns about inflation rising too quickly.