Despite signs of improvement in the US labor market, there is plenty of room for the jobless rate to fall further, Federal Reserve Chairman Ben Bernanke and two other top policymakers said on Friday, in comments that suggested continued support for the US central bank’s massive stimulus program.
The three spoke at separate events on the same day that the US Labor Department reported surprisingly strong jobs growth last month, though they all cautioned about drawing conclusions from economic data.
Bernanke said he still sees an “awful lot of slack” in the labor market, while saying that economic data does not do a good job of providing an accurate measure.
Bernanke was not specifically referring to the latest employment report, which showed the unemployment rate rose to 7.3 percent last month, while employers added 204,000 jobs, well above what economists had expected.
Atlanta Fed president Dennis Lockhart, of the, and San Francisco Fed president John Williams said they were encouraged by the job gains, but they warned against reading too much into one month of data.
Still, Lockhart said he would not rule out paring back the Fed’s massive stimulus program before the end of the year, suggesting that whether the Fed can safely cut its US$85 billion-a-month in bond purchases will be hotly debated when Fed policymakers next meet, next month.
Asked about the chance of a decision to scale back stimulus next month, Lockhart said: “Speaking for myself, I would not take off the table at least consideration at that time.”
Williams, speaking to reporters in Los Angeles, declined to put a timeline on when he would expect the Fed to start withdrawing stimulus.
Both Lockhart and Williams are centrists who do not vote on the Fed’s policysetting panel this year. Bernanke’s term as chief of the Fed expires at the end of January. The US central bank has said it will continue buying bonds until it sees substantial improvement in the job market outlook.
Lockhart told reporters that data leading up to the Fed’s meeting on Dec. 17 and Dec. 18 would likely be “noisy.”
“This is a period in which there are a lot of unusual things going on,” he said. “So for that reason, I would be a little reticent to draw up very profound conclusions from one month’s positive jobs number.”
Williams likewise said he does not want to be swayed by a single data point, however positive.