By Ian McKendry

WASHINGTON (MNI) – St. Louis Federal Reserve Bank President James
Bullard, speaking to reporters Thursday, said it is important to
communicate disagreements among Federal Reserve members to the markets,
because it allows them to try to determine the Fed’s future actions.

Bullard who spoke following a presentation to the National
Economists Club in Washington said, “If there is some dissent in
the Committee I think the markets should be aware of that, and then they
can factor in where they think the Committee might go in the future.”

Bullard said that it would be bad to have a fraction of the Federal
Open Market Committee disagree with the current policy and the public to
not know that, because if that fraction were to gain control the markets
would be upset.

Bullard also addressed the Federal Reserve’s latest decision to
stimulate the U.S economy with a second round of quantitative easing,
and during his presentation said he favored leaving the door open to
possibly scale back that stimulus in the event the economy begins to
heal.

But, Bullard added that the Fed is inexperienced with central bank
balance sheet policy, like the recent decision to purchase $600 billion
in U.S Treasurys and said because of that inexperience any decision to
curtail or expand the recent stimulus package will likely remain a
Committee decision.

“At this point I think it’s going to be a committee judgement, I
just don’t think we can be more precise than that because we don’t have
that much experience with these balance sheet policies,” Bullard said.

Bullard also said he did not have any concerns that recent policy
actions were not having the desired effect despite recent volatility
treasury yields.

“In the runnup to the meeting — that is about as classic a picture
as you will ever get about a monetary easing,” Bullard said, adding that
some things happened after the November 3 meeting but at that point
the quantitative easing decision had already been priced into the
market.

He also, said the Fed will continue to monitor the economy and make
decisions based on tell tail signs.

“I think as we always do, we will look at all the data and try and
will try to assess how we are doing on inflation side, how the real
economy is doing, what kind of progress we are making on both sides of
our mandate,” Bullard said.

“At the end of the day its the chairman and he makes the call,”
Bullard said about FOMC policy decisions.

** Market News International Washington Bureau: 202-371-2121 **

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