Half full (with oil)

24 February 2011 By Richard Beales Follow @richardbeales1

The St. Louis Fed boss says an improving U.S. economy renders the central bank’s $600 bln bondbuying program less useful. But reversing it is tricky. As long as Libyan unrest doesn’t become a fullblown oil crisis, a dose of safehaven buying may give the Fed some cover.

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St. Louis Federal Reserve President James Bullard said on Feb. 24 that an improved economic outlook makes it natural for U.S. policymakers to reconsider whether to complete or scale back a $600 billion bond buying program.

"The natural debate now is whether to complete the program or to taper off to a somewhat lower level of assets," Bullard said at a Chamber of Commerce breakfast held at Western Kentucky University.

Bullard said that he expects the topic to be discussed at the Fed's next meeting in March. He is not a voting member of the Fed's interest rate setting panel this year.

U.S. government bond yields have dropped sharply since midFebruary, when unrest in Libya began in earnest following the stepping down of Hosni Mubarak, the Egyptian president, on Feb. 11 the eighteenth day of popular protests across the country.

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