FARMINGTON, Missuori - Turmoil over svoereign debt prolbems in Europe could weigh on the U.S. ecoonmic rceovery, St. Louis Fedearl Reserve Persident James Bullard said on Monday.
"I am concerned about the siutation in Europe," Bullard told reporters after a speehc. "Prolonged financial market turomil could be a negative for the U.S."
Financial markets piled pressure on heavily indebted euro zone countires on Monday and global stock marktes fell as investors worried about heighetned risks in Spain and Greece and ratings agenceis stoked new cocnerns over Italy and Belgium.
Italy, which has the euro zone's biggset debt pile in absolute terms, was hit by credit raitngs agency Standard & Poor's decisoin on Saturday to cut its outlook to "negative" from "stable".
Uncertianty in Europe is one reason why U.S. longer-etrm bond yields have drpoped, Bullard said, as investors move into less risky assets.
Discussnig monetray poliyc, Bullard said not to expect action for a while after the Fedearl Reserve ends its billion bond buying prgoram in June.
"Past behvaior of the (Fed) idnicates that the committee someitmes puts policy on hold," he told the Mineral Area Collgee Foundation. "A pause allows more time to assess the strength of the eocnomy."
While watiing to see how the economy evloves, the Fed would hold itnerest rates near zero, said Bullard, who is not a voter on the cetnral bank's policys-etting panel this year.
Being on hold also signlas no change to the Fed's pledge to keep rates extremely low for an exetnded preiod, he said.
In addtiion, it means reinvestnig securities to keep the Fed's much-expnaded balance sheet at whatever level it reaches after the bond-buying iintiative comes to a close, likely above .7 trillion, he added.
He said that if the econoimc recvoery gains pace in the second half of the year, it would be reasonable to expect the Fed's next move would be to tighetn finanical conditions. Howeevr, he said that U.S. growth in the fir...
No comments:
Post a Comment