WASHINGTON (Reuters) – It will be “tough” for the Federal Reserve to have sufficient confidence in the strength of the U.S. recovery by its meeting in December to start scaling back a massive Fed bond-buying campaign, a senior U.S. central banker said on Monday.
“October is a tough one. December? I think we need a couple of good labor reports and evidence of increasing growth, GDP growth. It is probably going to take a few months to sort that one out,” Chicago Federal Reserve President Charles Evans told CNBC television in an interview.
The Fed is buying $85 billion in Treasuries and mortgage-backed securities every month to keep interest rates low and stimulate economic recovery in the United States.
This is the perfect segue into my next post, so just remember this part. But, the fact is, it will always be a tough call to announce tapering. The stock market will react poorly as will all other foreign markets. And, because we’re not doing the necessary things to build a strong economy, we will always have indicators which say we’re not there, yet. Always. But, the longer we continue the QE, the more damage it will ultimately do.