Fed Could Ease in Smaller Increments: Bullard

St. Louis Federal Reserve President James Bullard said Thursday he would back Fed purchases of Treasury securities in $100 billion increments meeting-by-meeting if the U.S. central bank decides monetary easing is necessary, but stressed no decision has been made.

"I've only seen a weak economy continuing along. That's why I've said before this would be a bit of a tough call here,'' Bullard told reporters Thursday.

"No decisions have been made and no decisions will be made until we get to the November meeting,'' Bullard told reporters.

"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.

The Fed cut interest rates to near zero in December 2008 and followed that with purchases of $1.7 trillion of longer-term securities to pull the economy out of recession.

Although the downturn officially ended in June 2009, persistently high unemployment and anemic growth have pushed the Fed to consider further monetary easing, which most analysts expect at the Fed's next policy meeting on Nov. 2-3.

Bullard, a voter on the Fed's policy-setting panel this year, declined to say whether he has made up his mind about the need for further easing. However, he said that while the recovery has not been derailed by a shock, sluggish economic growth and a grim jobs market have changed little in recent months.

"I've only seen a weak economy continuing along. That's why I've said before this would be a bit of a tough call here,'' he said. "On the other hand I agree ... that 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.''

Bullard has positioned himself in the center among his colleagues between the most inflation-focused hawks and the doves who place greatest emphasis on reducing unemployment. He has expressed concern that the United States is at risk of slipping into a deflationary downward spiral.

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