Bullard Leads The Fed

Janet Yellen may be about to replace Ben Bernanke as Fed Chair, but the decisionmaker there who seems to be calling what will be happening in the future is St. Louis Fed President, Jim Bullard.  After the initial foray to talk about tapering in May, he dissented at the June meeting on the dovish side, despite being prez of one of the traditionallhy most monetarist Feds.  He argued that they needed more data supporting an end to the taper to go for it, particularly on the inflation side. In September the FOMC surprised the markets by essentially following Bullard's advice, pulling back from a taper and declaring that more data was needed to support a taper.

Now he has done it again.  At the meeting concluded yesterday, the Fed announced a "tiny taper," cutting securities purchases from $85 billion per month to $75 billion per month.  Who was the first to publicly call for such a move?  Yep, Jim Bullard, on December 9 in a public statement, indeed, using the term "tiny taper" for what he thought they should do, and now they have done it.

So, things may change with the leadership transition, but anybody wanting to watch what the Fed is likely to do in the near future is advised to keep an eye on the public statements by Bullard.

Barkley Rosser