St. Louis Fed Chief: Recession Unlikely, Won’t Support Bond Buying

In a sign of increasing Fed confidence that the U.S. economy has avoided a possible “double-dip,” James Bullard, president of the Federal Reserve Bank of St. Louis, said current central bank policy is “appropriately easy” and another recession is unlikely.

“We probably avoided this recession scare that we’ve been having since August,” Bullard said Wednesday in a radio interview on “Bloomberg Surveillance” with Tom Keene. Recent economic reports have “surprised on the upside,” he said, according to the transcript.

Additional asset purchases are the central bank’s “most potent” weapon, he said, while adding he wouldn’t support more bond buying. “I think policy is already appropriately easy, so I don’t think we’re in any position to do that now,” he said.

“I think we’ll get away now without a recession,” Bullard said, saying he expected growth of 2% to 2.5% in the second half of this year. “It’s not great but it’s better than what people were expecting during the summer.”

The news service says Bullard attributed the sluggish growth to the aftermath of the housing bubble and noted that investment in the economy has not recovered to pre-recession levels.