Tags: Fed | Bullard | Bond | Buying | easing

Fed's Bullard: 'Modestly Successful' Easing Can Be Adjusted

Monday, 20 Dec 2010 08:45 AM

Federal Reserve Bank of St. Louis President James Bullard said provision of stimulus is “reviewable and changeable” depending on economic growth, which may be stronger next year than some economists forecast.

“I would like to adjust the program meeting by meeting,” Bullard said on CNBC television today. “We did get this sentence about ‘regular review’ — I take that very seriously.”

Fed Reserve policy makers led by Ben Bernanke disagreed over the decision last month to buy $600 billion of Treasurys, minutes of their Nov. 2-3 meeting show.

A majority saw a boost to growth and employment, while others were concerned about risks to inflation and the dollar. Bullard said the quantitative easing policy has been “modestly successful so far.”

“I think we can look at this going forward,” Bullard said. “We can see how things are going. It’s the same as how we’d operate in an interest-rate environment” where policy makers can examine the data and “make changes if in the” Federal Open Market Committee’s “judgment that’s warranted.”

Bullard said he’s “very concerned about feedbacks to commodity prices” from the Fed’s policy that has been dubbed QE2 for a second round of quantitative easing.

“The question to me would be is there some independent effect coming from monetary policy other than the supply and demand conditions globally,” he said. “I haven’t seen very much evidence of that but I am concerned about that and would like to keep an eye on it.”

Bullard said that while Europe’s fiscal crisis is “very serious” and may continue for “quite a while,” recent U.S. economic data “bodes well” for 2011.

“If we can get that going, I think the economy can build some momentum and we’ll be able to bring unemployment down,” he said. “But it is going to be a slow process. We have to walk before we can run.”

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Federal Reserve Bank of St. Louis President James Bullard said provision of stimulus is reviewable and changeable depending on economic growth, which may be stronger next year than some economists forecast. I would like to adjust the program meeting by meeting, Bullard...
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2010-45-20
Monday, 20 Dec 2010 08:45 AM
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