LONDON (MNI) – St. Louis Fed President James Bullard believes that
the economic outlook is looking ‘brighter’ in 2012 and says it is a good
time for the FOMC to take a breather and check incoming data before
making a decision on whether to extend QE.

“I think the economy is looking brighter in 2012 here. We can get
3% growth. I think we can get unemployment down (to) 7 to 8% by the end
of the year,” he told CNBC television in an interview.

Bullard continued, adding that QE3 would require some deterioration
of the current economic picture:

“The data is better so it is a natural time for the committee to
pause for a while. We have already got a very easy monetary policy.”

“This is a normal situation for the committee to sit back, get more
data and … try to collect our thoughts on the main things that are
affecting the economy.”

But he made clear that QE3 was not off the table:

“Monetary policy is always walking a fine line … I wouldn’t take
QE3 off the table.”

He continued:

“This is a potent weapon we can use but we should only use it if
the economy deteriorates.”

Bullard talked about a more gloomy view of the U.S. based on
coincident indicators but pointed out that this excluded a lot of

“Things like European sovereign debt crisis, the probability of a
meltdown in Europe falling, those kind of things aren’t factored in.”

“I think that is really what’s changed here. Early this year the
European situation has settled down some, obviously it’s still a

“The ECB has done a good job of restoring calm,” he added.

–London Bureau; Tel: +442078627492; email:

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