LONDON - The minutes of the last FOMC meeting are a "bit stale" and data since then have been somewhat stronger, says St Louis Federal Reserve President and Federal Open Market Committee member James Bullard.

Yet Bullard said that growth had disappointed expectations.

"Growth has not come in as strongly this year as we expected...Things haven't been where we'd like them to be," he said.

Bullard continued: "I do think the minutes are a bit stale as we've had some data since then that has been somewhat stronger," he said.

Bullard also said that growth of around 2% in the second half of 2012 would be strong enough for the Fed to keep its monetary policy stance on hold.

"If we were to resume, which I think we will, you know 2% growth, maybe a bit stronger than that in the second half of this year, unemployment ticks down through the rest of the year, that's not a great outcome but to me it's a good enough outcome to keep us on hold," he said.

Bullard also said that although the Fed has said it will keep rates on hold until 2015, he thinks they will have to be raised in late 2013.

"I have an earlier date (for raising rates), I'm late 2013," he said.

Turning to discuss the US fiscal situation, Bullard said that he thinks the lack of a fiscal deal was adversely afecting the US economy, adding that he was concerned that the Fed's actions were facilitating a buildup in US government debt.

"I do worry that we are facilitating a debt build up in the US," he said.

He also signaled his concerns on the euro zone crisis, saying he had become pessimistic on the zone's capacity to deal with the situation.

Bullard also said that he thought that Federal Reserve Chairman Ben Bernanke has not yet made a decision as to whether or not to back further policy easing at the next FOMC meeting.

"The chairman hasn't made a decision on that yet - and he's probably holding his cards close to his chest so he can get all the data in before he has to make a decision before the September meeting," he said.

Bullard also said that he thought the probability of the Fed launching another round of QE was lower than markets were currently pricing in.

"I think it's not as high as markets have had it during the summer," he said.

Bullard also said that he was concerned that a further round of quantitative easing would complicate the Fed's exit strategy when the time comes to tighten monetary policy.

"It would complicate the exit strategy, it would make it more difficult when the time comes. Frankly, I think our Operation Twist is also complicating the exit strategy," he said.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.