Political problems await when Fed needs to reverse policy: Bullard

NEW YORK Fri Feb 22, 2013 12:19pm EST

President of the Federal Reserve Bank of St. Louis in the U.S. James Bullard attends the European Banking and Financial Forum in Prague, March 29, 2011. REUTERS/Petr Josek

President of the Federal Reserve Bank of St. Louis in the U.S. James Bullard attends the European Banking and Financial Forum in Prague, March 29, 2011.

Credit: Reuters/Petr Josek

NEW YORK (Reuters) - Political problems await the Federal Reserve when it comes time to reverse its very accommodative monetary policies, Federal Reserve Bank of St. Louis President James Bullard said on Friday.

"We're going to pay interest on reserves to large banks in the U.S., and to foreign banks, to the tune of tens of billions of dollars, at a time when we're not going to pay anything back to the U.S. Treasury," Bullard said in describing the part of the Fed's planned strategy for the future.

"That sounds like a recipe for political problems."

(Reporting by Jonathan Spicer and Pedro da Costa; Editing by Chizu Nomiyama)

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