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Fed's Bullard sees rates on hold after QE2

Fed's Bullard sees rates on hold after QE2 (by Virginia M. Harrison)

SYDNEY (MarketWatch) -- The Federal Reserve is likely to keep policy rates on hold after QE2 to provide more time to evaluate the strength of the U.S. economy, a top official said late Monday. Federal Reserve Bank of St. Louis President James Bullard said the central bank is likely to keep its commitment of near-zero interest rates for an "extended period," after the expected June expiry of its asset purchases. "Past behavior of the Federal Open Market Committee indicates that the Committee sometimes puts policy on hold," he said, noting that a pause "gives the Committee more time to assess economic conditions." Speaking in Missouri, the St. Louis Fed president repeated calls for the central bank to abandon its use of core inflation, in favor of a wider measure. Bullard also warned that while commodity prices cannot continue to increase forever, "it is at least a reasonable hypothesis that global demand for energy will outstrip increased supply over the coming decades."

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Fed's Bullard sees rates on hold after QE2