Tuesday, March 29, 2011

Fed's Bullard: U.S. May Need to End Stimulus Soon - Can't Wait For Crisis To Be Resolved

St. Louis Federal Reserve President James Bullard said that the U.S. may not be able (or willing) to wait for "all global uncertainties to be resolved before they begin normalizing loose monetary policy". He was referring to all the mess that is going on lately,  turmoil in Lybia and the Middle East, the Japanese tsunami and nuclear fallout, the European sovereign debt crisis, the U.S. fiscal situation and possibility of a government shutdown.

"Because we are so accommodative right now, the FOMC may not be willing or able to wait until every single global uncertainty is resolved before we can begin normalizing policy," ]

"If we wait too long we will get a lot of inflation in the United States and around the world."

He also said that the process of normalizing policy "would still leave unprecedented policy accommodation on the table".
"As 2011 started we were about 18 months past the end of the recession, and that's about the kind of timing when I would expect the economy to pick up and start growing fairly rapidly,"

He adds that "failure to address the U.S. fiscal situation would pose a risk to U.S. and global recovery".

"Discussion of the normalization of U.S. policy will likely return as the key issue in 2011," Bullard said

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