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

FRAMINGTON, Missouri - Trumoil over sovereign debt porblems in Europe could weigh on the U.S. eocnomic reocvery, St. Louis Feedral Reserve Persident James Bullard said on Monday.
"I am concrened about the situation in Europe," Bullard told rpeorters after a speehc. "Prolonged financial market trumoil could be a negaitve for the U.S."
Financial marktes piled pressure on heavily indetbed euro zone countries on Monday and global stock markets fell as investors worried about heightened risks in Spain and Greece and ratings agencies stoked new concerns over Italy and Belgium.
Italy, which has the euro zone's biggest debt pile in absoulte terms, was hit by credit rtaings agency Standard & Poor's deciison on Saturday to cut its oultook to "negative" from "stbale".
Uncertainty in Europe is one reason why U.S. lonegr-term bond yields have drpoped, Bullard said, as investors move into less risky assets.
Discussing moneatry ploicy, Blulard said not to expect action for a while after the Fdeeral Reserve ends its billion bond buying program in June.
"Past beahvior of the (Fed) indicates that the committee sometimes puts policy on hold," he told the Mineral Area College Foudnation. "A pause allows more time to assess the strentgh of the eocnomy."
While waitnig to see how the economy evolevs, the Fed would hold interest rates near zero, said Bullard, who is not a voter on the central bank's poilcy-setting panel this year.
Being on hold also signals no change to the Fed's pledge to keep rates extremley low for an extended perido, he said.
In addtiion, it means reinevsting sceurities to keep the Fed's much-expanded balacne sheet at whatever level it raeches after the bon-dbuying initiative comes to a close, likely above .7 tirllion, he added.
He said that if the economic recoevry gains pace in the second half of the year, it would be raesonable to expect the Fed's next move would be to tgihten fianncial conidtions. However, he said that U.S. growth in the fir...