The US Federal Reserve could begin to reduce its asset purchases as early as October if economic data improve, a senior Fed official said as he hit back at critics of the central bank’s communications on its bond-buying programme.
James Bullard, president of the Federal Reserve Bank of St Louis, spoke at the end of a tumultuous week in central banking. Not only did the Fed stun markets by declining to move ahead with a tapering of its bond buying programme, but India’s central bank on Friday confounded investors by raising interest rates to combat inflation.
Mr Bullard defended the Fed’s decision and said tapering could “certainly” start at the next meeting of the Federal Open Market Committee in late October, if the central bank sees a measurable improvement in the economic outlook, including stronger inflation and employment numbers.