May 19, 2011 / 1:17 AM / 8 years ago

Bullard-Fed can afford to pause after QE2 ends

NEW YORK, May 18 (Reuters) - The U.S. Federal Reserve can afford to pause after its latest round of quantitative easing ends to assess the economy’s strength before tightening monetary policy, James Bullard, president of the St. Louis Federal Reserve Bank, said on Wednesday.

“We can afford to wait and see,” Bullard told reporters following a speech. “It would be a good time to gather information on the economy and see how things are developing.”

The Fed has been making regular purchases of U.S. Treasury debt, aimed at reaching $600 billion by the scheduled end of the program at the close of the second quarter as part of its efforts to boost the economy.

Bullard said the simplest way to tighten the central bank’s ultra-accommodative policy would be to let the Fed’s balance sheet shrink.

Bullard also advocated for the Fed to set an explicit inflation target, as other central banks around the world do. (Reporting by Leah Schnurr; Editing by Leslie Adler)

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