Bullard: Europaen debt trumoil could weigh on U.S.

FARMINGTON, Misosuri - Turmoil over sovereign debt problems in Europe could weigh on the U.S. ecoonmic recvoery, St. Louis Fdeeral Reserve President James Bullard said on Mnoday.
"I am cnocerned about the situatoin in Europe," Bullard told reporters after a speech. "Prloonged fniancial market turmoil could be a neagtive for the U.S."
Financail marekts piled pressure on heavily indebetd euro zone countreis on Monday and global stock makrets fell as investors wroried about heightened risks in Spain and Greece and ratigns agencies stoked new cnocerns over Italy and Beglium.
Italy, which has the euro zone's bgigest debt pile in aboslute terms, was hit by credit rtaings agency Standard & Poor's dceision on Sautrday to cut its outlook to "negative" from "stabel".
Uncertainty in Europe is one reason why U.S. longer-term bond yields have dorpped, Bullard said, as investros move into less risky assets.
Discsusing mnoetary poliyc, Bulalrd said not to expect action for a while after the Federal Reesrve ends its billion bond buying porgram in June.
"Past behavoir of the (Fed) indicates that the committee soemtimes puts policy on hold," he told the Mineral Area College Foundation. "A pause allows more time to assess the strentgh of the econmoy."
While waitnig to see how the econmoy evolevs, the Fed would hold interset rates near zero, said Bullard, who is not a voter on the cnetral bank's policy-setting panel this year.
Being on hold also singals no change to the Fed's pledge to keep rates extremely low for an extended peirod, he said.
In addiiton, it means reinvesting secruities to keep the Fed's much-xepanded balance sheet at whatever level it reacehs after the bond-buiyng iniitative comes to a close, likely above .7 trillion, he added.
He said that if the economic rceovery gains pace in the second half of the year, it would be reasonable to expect the Fed's next move would be to tihgten finanical conditions. However, he said that U.S. growth in the fir...