(Updated with comments from Dennis Lockhart, president of the Federal Reserve Bank of Atlanta.)
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A top Federal Reserve official said Friday that while the central bank is leaning toward more stimulus for the economy, its policy is in "limbo" until members get more concrete data.
"I think we had this long string of bad news, sort of, through the first or second quarter of the year. But I think that's turned around a little bit" since the last meeting of the Fed's policy-setting body, the Federal Open Market Committee, on July 31 and Aug. 1, said James Bullard, president of the Federal Reserve Bank of St. Louis. "So that's leaving the committee in a little bit of a limbo."
"We do have an easing bias," he said in an interview with FOX Business at the annual central bankers' conference in Jackson Hole, Wyo., sponsored by the Federal Reserve Bank of Kansas City. "But whether to take action--or if we do, then exactly what action to take--I think those are all unclear."
Since the last FOMC meeting, the government has reported stronger-than-expected job growth, 163,000 new positions in July; a slight upward revision to second-quarter economic growth, to 1.7%, and a pickup in personal income and spending, among other indicators.
Economists consider the jobs report for August, to be released this Friday, the most important economic indicator for the next FOMC meeting on Sept. 12-13.
The Fed has already announced at least one possible additional stimulus move for its agenda at that meeting: whether to extend its low-rate pledge for a longer period.
Frustrated by the slow pace of the economic recovery and continuing high unemployment, the FOMC announced in January that it intended to keep short-term rates "exceptionally low" through late 2014. Previously, it had approved keeping them low through 2013.
Supporters of this communications strategy, including Fed Chairman Ben Bernanke, hope it will help stimulate stronger economic growth.
"To the extent we can communicate that interest rates will be lower for longer, that will ease financial conditions and be a way we can affect the state of the economy," Bernanke said at a press conference in January.
The Fed wants "accommodative financial conditions," he said, "so that it's attractive to firms to invest and hire, attractive for those who are eligible to buy homes, and so on."
In a note to clients, RBC Capital Markets predicted the FOMC will approve extending the so-called "forward guidance" next month: "In the end, changing the language is a low cost policy response so why wouldn’t you like it?"
The firm added that "come the September meeting, 2014 is likely to shift to 2015."
Bullard suggested he would support a change.
"I haven't liked the calendar date," he said. "But if we're going to have the calendar date, I think you do have to move it when the economic situation changes. And so, you know, that's where we are."
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, was also open to a shift.
"I do think the outlook is weak enough that certainly there could be a case for extending that," he said. "It will be based on the (economic) outlook and...so there is a certain degree of science involved...You have to base this on something and so we've put together, as scientifically as we can, a forecast. And if it indicates that the conditions for beginning to raise (interest) rates are not going to prevail as early as, say, 2014, then you sort of fall into that decision."