MNI POLICY: Fed's Bullard Sees No Need To Change QE Right Now

Federal Reserve Bank of St. Louis President James Bullard said Friday he saw no need to change the pace of asset purchases because monetary policy is "in a very good place" as the economy continues the long climb out of the pandemic.

"For now we're in good shape," he told reporters on a call. "This is a longer range discussion about how we might play this going forward. I don't think we have to make any moves right now."

Whether the Fed extends its emergency lending facilities past December also "may not be that material to financial markets" because "we've established we're willing to provide the backstop" and that is what affects market behavior, he said.

The Fed's corporate bond purchase program, Main Street and municipal lending facilities and others are due to expire at the end of the year unless Treasury and Fed officials extend them.

END IN SIGHT

Bullard expects investment to "pick up substantially" as investors digest more positive news about the viability of new vaccines against Covid-19, he said. Stocks surged this week after Pfizer and BioNTech reported encouraging results from their vaccine trials.

"There's a 'light at the end of the tunnel' effect here. The pandemic will come to an end, as investors see that, they will continue to invest in the post-pandemic world," he said.

"Almost all of GDP can be produced even with the pandemic going on" if individuals and businesses alter their protocols, he said, urging people to take advantage of low-cost measures including wearing masks, staying away from each other and wearing protective equipment. "Because of the adaptability of the U.S. economy, you don't need to wait for the vaccine to get a good economy."

Despite his rosy outlook, Bullard added: "I don't want to change monetary policy despite being more optimistic. Monetary policy is right whether you're more optimistic or pessimistic."