* Uncertainties include M.East/N.Africa turmoil, Japan
* U.S. fiscal situation, euro crisis are other risks
* Discussion of normalistion likely key issue in 2011
* Bullard says waiting too long will bring inflation
(Adds new quotes, details)
By Jan Lopatka and Michael Winfrey
PRAGUE, March 29 (Reuters) - U.S. policymakers may not be
willing or able to wait for all global uncertainties to be
resolved before they begin normalising loose monetary policy,
St. Louis Federal Reserve President James Bullard said on
Tuesday.
Such issues include the turmoil in the Middle East and North
Africa, the aftermath of the Japanese tsunami, the European
sovereign debt crisis and the U.S. fiscal situation and
possibility of a government shutdown, Bullard said in a speech
in the Czech capital.
"Because we are so accommodative right now, the FOMC may not
be willing or able to wait until every single global uncertainty
is resolved before we can begin normalising policy," he said,
referring to the policymaking Federal Open Market Committee.
Bullard, who is not a voting member of the Fed's policy
setting panel this year, added: "If we wait too long we will get
a lot of inflation in the United States and around the world."
On the main global risks, he said that the most likely
prospect was that they would be resolved "without becoming
global macroeconomic shocks".
The Fed has kept short-term interest rates near zero since
December 2008 and has bought more than $2 trillion in long-term
securities to push borrowing costs down further and boost
recovery from the 2007-2009 recession.
Bullard, seen as a centrist on the spectrum of supporters
and opponents of aggressive Fed actions to boost the economy,
said that the process of normalising policy would still leave
unprecedented policy accommodation on the table.
His comments on Tuesday came after he said at the weekend
that the Fed should consider trimming its $600 billion bond
purchase programme given solid U.S. economic data.
[]
On Monday, top Fed officials said the U.S. economy still
needed support from the Fed's bond buying programme, which is
slated to end in June, with some suggesting recent spikes in gas
and food price are likely to be short-lived. []
GROWTH PROSPECTS IMPROVE
Bullard said in Prague on Tuesday that growth prospects
remained reasonably good and had improved since last summer.
Anecdotal reports were more bullish, which showed
"profitable businesses with considerable cash and an improving
outlook," he said, adding an improving economy 18 months
post-recession was a "strong positive."
"As 2011 started we were about 18 months past the end of the
recession, and that's about the kind of timing when I would
expect the economy to pick up and start growing fairly rapidly,"
Bullard said.
But he said any failure to address the U.S. fiscal situation
would pose a risk to U.S. and global recovery.
President Barack Obama's Democrats on Monday offered to cut
another $20 billion from the U.S. budget in an attempt to reach
a deal with congressional Republicans that would avert a
government shutdown. []
Bullard said monetary policy could not remain
ultra-accommodative indefinitely. "Discussion of the
normalization of U.S. policy will likely return as the key issue
in 2011," Bullard said.
(Writing by Michael Winfrey and Jason Hovet; Editing by Hugh
Lawson/Hugh Lawson
