LITTLE ROCK, Arkansas (Reuters) - Extremely easy Federal Reserve monetary policy is right for the current economic conditions, St. Louis Fed President James Bullard said on Friday in remarks that deviated little from past statements.
“The current stance of monetary policy is ultra-easy and remains appropriately calibrated given the macroeconomic situation in the U.S.,” he said in a speech to business and community representatives.
Bullard is not a voter this year on the policy-setting Federal Open Market Committee. While often described as a centrist on the spectrum of policymakers’ views, the St. Louis Fed leader has recently opposed calls for further Fed actions to gird a modest economic recovery.
Bullard reiterated many of his concerns about super-easy monetary conditions on Friday, saying they risk setting off an inflation brushfire when the economy recovers. He also said a long period of near-zero interest rates punishes those who save money rather than lend it.
The Fed last week extended its informally named Operation Twist program of selling short-term securities and replacing them with longer-term ones to drive longer-term interest rates lower. It cut short-term rates to near zero more than three years ago, has bought $2.3 trillion in bonds, and promised conditionally to hold rates near zero through late 2014.
Bullard said last week after the Fed meeting that there would be a high bar to any further Fed bond buying.
On Friday, Bullard said European sovereign debt turmoil had only modestly heightened U.S. financial strains. The Fed could reopen liquidity facilities rolled out in the wake of the 2007-2009 crisis if euro zone problems escalated, he said.
Reporting By Mark Felsenthal; Editing by Andrea Ricci and James Dalgleish