Bullard sees Fed continuing bond buying as inflation stable

Exit Strategy

Bullard said the committee started talking about its exit strategy from monetary easing in 2011 and could return to those discussions.

“This is a big balance sheet and it could be hard to unwind,” Bullard said. “Long ago in the spring of 2011 the committee actually talked about and sort of outlined an exit strategy. The chairman has said recently that maybe we’ll have to revisit that because the balance sheet is bigger now.”

Chairman Ben S. Bernanke and Vice Chairman Janet Yellen in speeches this month affirmed a commitment to record stimulus that has pushed the central bank’s balance sheet beyond $3 trillion.

The committee in the minutes of its Jan. 29-30 meeting indicated that it may consider slowing asset purchases, as officials debate whether the monetary easing risks unleashing inflation or fueling asset-price bubbles.

Adjusting Purchases

Bullard has been an advocate of adjusting asset purchases based on changes in the economic outlook.

February’s payroll growth beat the 165,000 median estimate of 90 economists surveyed by Bloomberg. The economy added 119,000 workers in January, revised down from 157,000, the Labor Department data showed.

Gross domestic product grew at a 0.1% annual rate in the fourth quarter, up from a previously estimated 0.1% drop, revised Commerce Department figures showed Feb. 28. Federal military outlays declined at a 22% annual pace, the largest drop since 1972.

The Fed said March 6 in its Beige Book business survey, based on reports from the 12 regional Fed banks, that the economy grew at a modest to moderate pace across most of the country amid rising demand for homes and autos.

Bullard, 52, joined the St. Louis Fed’s research department in 1990 and became president of the regional bank in 2008. His district includes Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Bloomberg News

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