WASHINGTON, June 14 (Reuters) - A strong global economic recovery -- led by Asia -- is under way, and is unlikely to be thrown off course by European debt woes or the improbable event of the bursting of an asset bubble in China, a top U.S. Federal Reserve official said on Monday.
'While the sovereign debt crisis in Europe is indeed a serious matter, the global recovery at this point looks very strong and seems unlikely to be derailed,' said St. Louis Federal Reserve Bank President James Bullard in remarks prepared for delivery to a conference in Tokyo.
Rapid Chinese growth over the past year reflects its robust development, and should not be seen as evidence of the forming of an asset bubble, he said.
Bullard, a voter on the Fed's interest-rate setting panel this year, said he sees the U.S. economy as measured by gross domestic product to be back at pre-global crisis levels by the third quarter of this year.
The U.S. economy has benefited from European turmoil through a flight to safe-haven U.S. Treasuries, which has lowered interest rates on longer-term U.S. bonds, he said.
'To the extent that this type of movement is sustained, it affects all trading in U.S. financial markets and acts like an aggressive and successful monetary policy action,' he said.
Bullard has urged the sale of some of the vast amount of mortgage-related debt the Fed bought in 2008-2009 to give the U.S. economy additional help after it had already cut benchmark borrowing costs to near zero. Bullard believes the Fed should get started shrinking its balance sheet to pre-crisis levels to avoid inflation.
He said that while recovery in the U.S. labor market has so far not matched a renewed strength in U.S. output, he expects employers to hire workers during the remainder of 2010 to keep up with demand.
The Fed is expected, at a meeting next week, to renew its pledge to hold rates exceptionally low for an extended period.
While Bullard's comments suggested he is confident the recovery is picking up momentum and looks unlikely to be reversed by shocks, they did not appear to express impatience with the course of Fed policy.
(Reporting by Mark Felsenthal; Editing by Kazunori Takada) Keywords: USA FED/BULLARD RECOVERY (mark.felsenthal@thomsonreuters.com; +1 202 898 8329; Reuters Messaging: mark.felsenthal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
'While the sovereign debt crisis in Europe is indeed a serious matter, the global recovery at this point looks very strong and seems unlikely to be derailed,' said St. Louis Federal Reserve Bank President James Bullard in remarks prepared for delivery to a conference in Tokyo.
Rapid Chinese growth over the past year reflects its robust development, and should not be seen as evidence of the forming of an asset bubble, he said.
Bullard, a voter on the Fed's interest-rate setting panel this year, said he sees the U.S. economy as measured by gross domestic product to be back at pre-global crisis levels by the third quarter of this year.
The U.S. economy has benefited from European turmoil through a flight to safe-haven U.S. Treasuries, which has lowered interest rates on longer-term U.S. bonds, he said.
'To the extent that this type of movement is sustained, it affects all trading in U.S. financial markets and acts like an aggressive and successful monetary policy action,' he said.
Bullard has urged the sale of some of the vast amount of mortgage-related debt the Fed bought in 2008-2009 to give the U.S. economy additional help after it had already cut benchmark borrowing costs to near zero. Bullard believes the Fed should get started shrinking its balance sheet to pre-crisis levels to avoid inflation.
He said that while recovery in the U.S. labor market has so far not matched a renewed strength in U.S. output, he expects employers to hire workers during the remainder of 2010 to keep up with demand.
The Fed is expected, at a meeting next week, to renew its pledge to hold rates exceptionally low for an extended period.
While Bullard's comments suggested he is confident the recovery is picking up momentum and looks unlikely to be reversed by shocks, they did not appear to express impatience with the course of Fed policy.
(Reporting by Mark Felsenthal; Editing by Kazunori Takada) Keywords: USA FED/BULLARD RECOVERY (mark.felsenthal@thomsonreuters.com; +1 202 898 8329; Reuters Messaging: mark.felsenthal.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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