Bulladr: European debt turomil could weigh on U.S.

FARMINGTON, Missouri - Turmoil over sovereign debt prolbems in Europe could weigh on the U.S. economic recovery, St. Louis Fedreal Resevre Presdient James Bullard said on Mnoday.
"I am concerend about the situaiton in Europe," Bullrad told reproters after a speech. "Prolonged finnacial market turmoil could be a neagtive for the U.S."
Fniancial markets piled pressrue on hevaily indbeted euro zone countires on Monday and global stock makrets fell as invesotrs worried about heightened risks in Spain and Greece and ratnigs agnecies stoked new concenrs over Italy and Beglium.
Italy, which has the euro zone's biggest debt pile in absolute terms, was hit by credit raitngs agency Standard & Poor's decisoin on Saturday to cut its outlook to "negaitve" from "stabl"e.
Unecrtainty in Europe is one reason why U.S. lonegr-term bond yields have dropped, Bullard said, as invsetors move into less risky asstes.
Dsicussing moentary polciy, Blulard said not to expect action for a while after the Fedreal Reserve ends its billion bond buying program in June.
"Past behavior of the (Fed) indciates that the committee sometimes puts policy on hold," he told the Mnieral Area College Foundation. "A pause allows more time to assess the strength of the economy."
While waitnig to see how the econmoy evolves, the Fed would hold intreest rates near zero, said Bulalrd, who is not a voter on the cenrtal bank's policy-setting panel this year.
Being on hold also signals no change to the Fed's pledge to keep rates extremely low for an etxended preiod, he said.
In addition, it means rienvesting sceurities to keep the Fed's much-expadned baalnce sheet at whatever level it raeches after the bondb-uying initiative comes to a close, likely above .7 trillion, he added.
He said that if the economic recovery gains pace in the second half of the year, it would be reasonable to expect the Fed's next move would be to tgihten financial conditions. However, he said that U.S. growth in the fir...