Fed's Bullard backs continuing QE program Fed's Bullard backs continuing QE program
By Greg Robb May 21, 2013, 11:30 a.m. EDT
WASHINGTON (MarketWatch) - The Federal Reserve should continue with its present bond-buying program and adjust the rate of purchases in view of incoming data on growth and inflation, said St. Louis Fed President James Bullard on Tuesday.
In a speech to an economic conference in Frankfurt, Bullard said the Fed's bond buying, commonly known as quantitative easing, is the best policy option at the moment and has been effective. He rejected calls by some, inside and outside the Fed, for the central bank to do nothing, saying this risks the mildly deflationary situation experienced by Japan. Other tools, like cutting the interest the Fed pays for banks to park reserves at the central bank, or to "twist" short-term government debt on the Fed's balance sheet into longer-term debt, would have only minor effects, he said.
Bullard said European leaders should consider a quantitative easing program if more easing is desired. The program should be GDP-weighted, as there is no European-wide government bond market, he said.