(Recasts, adds details and background)
*Fed's Bullard-would favor $100 bln easing increments
*Bullard - economy little changed since summer
*Fed could signal at each meeting if easing more
By Mark Felsenthal
ST. LOUIS Oct 21 St. Louis Federal Reserve
President James Bullard said on Thursday he would favor Fed
purchases of Treasury securities in $100 billion increments
one Fed meeting at a time if the U.S. central bank decides
monetary easing is necessary.
"If we do decide to go ahead with quantitative easing ...
we could think in units of about $100 billion," he said.
"And then I think we could give forward guidance for the
next meeting that would suggest how likely the committee
thinks it is to continue these purchases," he added.
Bullard's comments add to those of other Fed officials
whose remarks suggest the U.S. central bank is on the cusp of
pumping more money into the economy to support a flagging
The Fed cut interest rates to near zero and bought $1.7
trillion of longer-term securities to pull the economy out of
recession, but with an anemic recovery and persistently high
unemployment, policymakers are expected to step in with
another round of stimulus.
Analysts anticipate around $500 billion in fresh Treasury
buying to be announced at the Fed's Nov. 2-3 meeting, and some
see a shopping spree of $1 trillion or more.
Fed Chairman Ben Bernanke said last week that a prolonged
period of high unemployment could choke off the U.S. recovery
and that the low level of inflation presented an uncomfortable
risk of deflation, a dangerous downward slide in prices. Such
circumstances would seem to meet the threshold for further Fed
action, he said.
On Tuesday, Atlanta Fed President Dennis Lockhart said any
additional Fed securities purchases would have to be large
enough to have an impact and that increments of about $100
billion would be roughly on target.
FAVORS NO CEILING
Bullard, a voter on the Fed's policy-setting panel this
year, said the decision on further easing is "a tough call,"
but acknowledged that sluggish economic growth and a grim jobs
market are little improved in recent months.
"We've only got this weak data, weak job growth, and so
we're not that different from the position we were in during
the summer," he said.
Bullard further said he does not think the Fed should set
a ceiling on how much further easing it is willing to
"You just leave it open-ended," he said. "People would
impute what they think the Fed's going to do based on their
own forecasts... We would do the best we can to communicate
how we think the program is evolving."
The Fed has considered measures beyond securities
purchases to bolster the recovery, including setting goals for
higher inflation than it prefers on a temporary basis.
But Bullard, who is at the center of a continuum among
policymakers between those who would contain inflation at all
costs and those who emphasize full employment, said the time
is not ripe for such an approach, known as price-level
"It would be too large of a step at this juncture ... but
I would retain an open mind as a step we could take in the
future if we felt our existing policies weren't producing
satisfactory results," he said.
(Reporting by Mark Felsenthal; Editing by James Dalgleish)