Tags: Bullard | Fed | Policy | easy

Bullard: Fed Policy Is ‘Appropriately Easy’

Wednesday, 19 Oct 2011 08:48 AM

James Bullard, president of the Federal Reserve Bank of St. Louis, said current central bank policy is “appropriately easy” and another recession is unlikely.

“We probably avoided this recession scare that we’ve been having since August,” Bullard said today in a radio interview in St. Louis on “Bloomberg Surveillance” with Tom Keene. Recent economic reports have “surprised on the upside,” he said.

Additional asset purchases are the central bank’s “most potent” weapon, he said, while adding he wouldn’t support more bond buying. “I think policy is already appropriately easy, so I don’t think we’re in any position to do that now,” he said.

Policy makers voted Sept. 21 to extend the maturities of the bonds in the Fed’s portfolio in a bid to push down mortgage and other loan rates and spur growth. Some officials last month wanted to keep further asset purchases as an option to boost the economy as policy makers saw “considerable uncertainty” that U.S. growth will pick up, according to minutes of their meeting, released last week.

Recent economic data support the Fed’s view, expressed in its Sept. 21 statement, that there will be “some pickup in the pace of recovery over coming quarters.”

Employers added 103,000 jobs in September, up from a gain of 57,000 the month before. Retail sales last month rose by the most in seven months, and factory production climbed.

Pace of Expansion

The economy probably expanded at a 2 percent annual pace in the third quarter, according to the median forecast in a Bloomberg News survey of economists taken from Oct. 5 to Oct. 11. That compares with growth of 1.3 percent in the second quarter and 0.4 percent in the first three months of the year.

Fed policy makers differed this week over the central bank’s ability to boost growth, with the Chicago Fed’s Charles Evans calling for more action to fight a “massive” shortfall in employment and Richmond’s Jeffrey Lacker saying further steps would probably serve only to stoke inflation.

“If we sit on our hands as the economy withers relative to our mandate, then we could take a huge hit to our credibility,” Evans said in a speech in Detroit. Lacker, speaking in Salisbury, Maryland, said there’s little more the Fed can do because “the strength of this recovery is going to be relatively independent of our monetary policy choices.”

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James Bullard, president of the Federal Reserve Bank of St. Louis, said current central bank policy is appropriately easy and another recession is unlikely. We probably avoided this recession scare that we ve been having since August, Bullard said today in a radio...
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Wednesday, 19 Oct 2011 08:48 AM
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