Is Bullard bluffing? Gold and silver markets reversed Wednesday’s No-Taper rally today after St. Louis Federal Reserve Bank President James Bullard threw cold water on the dollar dumping party.
In an interview with Bloomberg News this morning, Bullard reignited talk of taper when he said that October might still see a reduction in QE and that the vote this week to continue the $85 Billion in monthly bond purchases was a close one.
A week before the Surprise FOMC Decision on Wednesday, PMBull observed that all the talk of taper was missing an important fact. The economy was in no condition to justify an end to QE. We hinted that the Fed may be boxed into a corner, unable to stop the flood of easy money (didn’t Bernake also tell Congress that very thing?). Louis Cammarosano at the Smaulgld Economics and Real Estate blog provided a nice, concise background on current economic conditions, going into the Federal Reserve Open Market Committee meeting.
The Bernanke Bullard Bluff?
In a follow-up piece today, Louis says that Bullard is Bluffing with regards to October QE talk, in general agreement with our assessment that the Fed is trapped. In that Bloomberg interview that rocked the markets backwards again today, Bullard suggested that the vote was close with respect to the September FOMC statement, and we are now to be on the lookout for Taper in October. Louis observes that the vote was 11-1 in favor of leaving things as they are. Real close Mr. Bullard.