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Fed's Bullard: Jobs Growth May Lead To Small Taper In December

JamesBullard 120913

The Federal Reserve may taper their $85 billion dollar per month asset purchase plan next week in response to better-than-expected jobs growth, said James Bullard, the president of the St. Louis Federal Reserve Bank.

Job growth in the month of November pushed the unemployment rate down to a five-year low of 7 percent, the Labor Department reported on Friday.

"Based on labor market data alone, the probability of a reduction in the pace of asset purchases has increased," Bullard told the CFA Society St. Louis on Monday.

Bullard expects the positive momentum in the jobs market to carry over into 2014.

Inflation, however, does not appear to be picking up despite historically low interest rates and a massive influx of cash from the Fed.

"A small taper might recognize labor market improvement while still providing the [Fed] the opportunity to carefully monitor inflation during the first half of 2014," Bullard said.

"Should inflation not return toward" the Fed's 2 percent target, policy makers "could pause tapering at subsequent meetings."

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