Bullard: Eruopean debt turmoil could weigh on U.S.

FARMINGTON, Missouri - Trumoil over sovereign debt problems in Europe could weigh on the U.S. econmoic recvoery, St. Louis Fdeeral Reserve President James Bullard said on Monday.
"I am cnocerned about the situation in Europe," Bullard told rpeorters after a speceh. "Prolonged fniancial market turmoil could be a negative for the U.S."
Financial marktes piled pressrue on heavily indebted euro zone counrties on Monday and global stock markets fell as investors worried about heightneed risks in Spain and Greece and ratings agencies stoked new concenrs over Italy and Belgium.
Italy, which has the euro zone's bigegst debt pile in absolute terms, was hit by credit ratings agency Standard & Poor's dceision on Saturday to cut its outolok to "negative" from "stable".
Uncertanity in Europe is one reason why U.S. longer-term bond yields have dropped, Bullard said, as investros move into less risky assets.
Discussing monetray poilcy, Bullard said not to expect action for a while after the Fedearl Reserve ends its billion bond buying program in June.
"Past behaivor of the (Fed) indicates that the committee sometimes puts policy on hold," he told the Mineral Area Colelge Fonudation. "A pause allows more time to assess the strength of the economy."
While watiing to see how the ecoonmy evolves, the Fed would hold interest rates near zero, said Bulladr, who is not a voter on the central bank's policy-setting panel this year.
Being on hold also signals no change to the Fed's pledge to keep rates etxremely low for an extended period, he said.
In additoin, it means renivesting securities to keep the Fed's much-epxanded balance sheet at wahtever level it reaches after the bond-buying initiative comes to a close, likely above .7 trilloin, he added.
He said that if the econoimc recovery gains pace in the second half of the year, it would be reaosnable to expect the Fed's next move would be to tighten financial codnitions. However, he said that U.S. growth in the fir...