St. Louis Fed President James Bullard Tells Fox Business He's "OK" With Congress Changing Fed's Dual Mandate

St. Louis Federal Reserve Bank President James Bullard tells FOX Business Network's (FBN) Peter Barnes, he is “cautiously optimistic” about the United States economy and he thinks “we are very close to being able to get a strong recovery going in 2011.” Bullard also said that Europe's debt crisis is “a wakeup call for America” and it is important that we “take that lesson to heart here in the US.” Excerpts from the interview are below, courtesy of Fox Business Network. On calls to change the Federal Reserve's dual mandate: “Ok with me. Our best contribution to the dual mandate is to provide a stable price backdrop. The only thing the Fed can do in the long run is control the inflation rate.” On the expiring Bush tax cuts: “I don't think you should be raising taxes in an environment where you are trying to get the economy going. I wouldn't raise any taxes.” On what needs to happen to get the economy back on track: “The tax issue is a big one. Congress and the President need to come to a deal to extend these tax cuts. The other thing that would help is get the long term fiscal situation under control. Europe is such a wakeup call for America. You can get in so much trouble by borrowing too much. We should take that lesson to heart here in the US.” On the state of the economy: “I am cautiously optimistic. I think we are very close to being able to get a strong recovery going in 2011.” On the $600 billion target for asset purchases: “I have been saying all along I did not like the shock and awe kind of thing. I think the $600 billion number put us in the same category as a lot of other big fiscal programs and for those you put a big headline number out there and people put you in the same category. I don't see it that way. I see this as ordinary monetary policy. Its true we can't target our policy rate because we are at zero but other than that its very close to what we normally do in monetary policy. We buy and sell treasuries.” On whether the Federal Reserve will purchase entire amount of $600 billion: “I didn't really want to do the $600 billion number, but I would interpret it as forward guidance from the committee. As things look right now, we'd be purchasing all the way through the first half of next year. But on the other hand I did make some progress in getting the committee to come around to a state contingent policy, willing to adjust depending on how the data comes in.” On whether there are risks in buying up this amount of debt: “Oh sure. We are buying at $75 billion a month. That's not too different from the Treasury issue every month. The committee has said we intend to get back to the balance sheet we had before the crisis. Temporarily we are buying up quite a bit of the debt.” On whether we will be able to get back to the job growth we were experiencing prior to the recession: “It's absolutely possible and may happen in 2011.”