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Post by bot on May 19, 2014 23:35:07 GMT -5
WASHINGTON (MarketWatch) -- The Federal Reserve's twin goals of stable prices and low unemployment "are within sight," said James Bullard, the president of the St. Louis Federal Reserve Bank, on Friday. Using a mathematical formula, Bullard said the Fed is closer to its goals than it has been 60% of the time since 1960. "This helps to justify the Fed's tapering of asset purchases," Bullard said in a speech to bankers in Little Rock, Ark. Then if the central bank is relatively close to its objectives, why is policy so far from normal, Bullard asked rhetorically. "Two reasons: labor markets do not seem to be fully recovered [and] inflation remains low," he said. Bullard noted that there has been a "tame" reaction in global financial markets this year to the Fed's tapering of asset purchases, especially compared with the turmoil of last summer when the Fed first hinted it was thinking about slowing the pace of bond buys. Bullard said one reason for this might be that it was "premature" to argue last June that the economy was strong enough to pull back the purchases.
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