STOCKHOLM May 27 A top Federal Reserve official
said on Thursday that he did not expect contagion from Europe's
fiscal problems to the United States and that the world's
biggest economy may actually benefit from a "flight to safety".
St. Louis Federal Reserve President James Bullard said
European debt worries helped drive down longer-term U.S. yields.
"Right now, I think the U.S. is going to be a beneficiary of
the crisis in Europe, barring any contagion, and I'm arguing
that I don't see how the contagion could occur," Bullard told
reporters in Stockholm, noting the debt guarantees European
authorities had put in place.
Bullard also said U.S. policy makers were watching the
situation carefully and he was open to the possibility that
contagion could occur though an unexpected channel.
Bullard said that while he has advocated a higher discount
rate to get policy spreads in the United States back to more
normal levels, he did not see the discount rate rising in the
He added inflation in the United States did not appear to be
a problem and that any inflation risk would be over the medium