Fed could taper in September but doesn't have to: Lockhart

Fed could taper in September but doesn't have to: Lockhart

Dennis Lockhart, President, Federal Reserve Bank of Atlanta, takes part in a panel discussion titled ''Twist and Shout: The Limits of U.S. Monetary Policy'' at the Milken Institute Global Conference in Beverly Hills, California May 1, 2012. 

Credit: Reuters/Danny Moloshok

WASHINGTON | Tue Aug 6, 2013 12:54pm EDT

(Reuters) - The Federal Reserve could begin reducing the size of its bond-buying stimulus program as early as September but might wait longer if economic growth fails to pick up in the second half of the year, a top Fed official said on Tuesday.

Atlanta Fed President Dennis Lockhart told Market News International in an interview that continued improvement in the labor market would be key.

"If we see the growth pick up in the second half and if we see a continuation of the job gains that we - not (the) 162,000 number that we saw last month but at a higher range, say 180-200,000 - I think with other fundamentals improving we probably are in a position to remove ... the extraordinary policy program over the medium term - that being the asset purchase program," he said.

On the other hand, Lockhart said, "If we see a deterioration from this point, and I would say my more realistic fear is just a kind of ambiguous picture of mixed data that signal neither accelerating strength nor necessarily deterioration, but that kind of moping along in the middle, then I think it's not a foregone conclusion that the asset purchase program should be removed or be removed rapidly."

The Fed is currently buying $85 billion per month in mortgage-backed and Treasury securities in an effort to keep long-term rates down and bolster the economic recovery. Gross domestic product grew 1.7 percent in the second quarter, though favorable trade deficit figures on Tuesday led some economists to boost their estimates for future revisions.

(Writing by Pedro Nicolaci da Costa; Editing by James Dalgleish)