* Bullard says QE2 could be trimmed by some $100 bln
* Says differences of opinion in Fed
* Bullard says waiting too long will bring inflation
* Uncertainties include M.East/N.Africa turmoil, Japan
* U.S. fiscal situation, euro crisis are other risks
(Adds trimming asset buying, quotes)
By Jan Lopatka and Michael Winfrey
PRAGUE, March 29 (Reuters) - The U.S. Federal Reserve's $600
billion asset purchase programme could be trimmed by some $100
billion given the recovery in the U.S. economy, St. Louis
Federal Reserve President James Bullard said on Tuesday.
He told an economic conference in Prague U.S. policymakers
may not be willing or able to wait for all global uncertainties
to be resolved before they begin normalising their very loose
monetary policy.
"One of the things that I'm concerned about is that policy
is so easy right now that we have to get started on the process
of getting back to normal, because it will take a long time to
get back to normal," Bullard told reporters on the sidelines of
the conference.
When asked if he meant now, he said: "Yes, we're still
buying treasuries. We're feeding the fire at this moment."
He said however there seemed to be difference of opinion in
the Fed on the speed of reversing monetary easing.
"I think it could be on the order of $100 billion less than
what we had initially thought, but I would leave that up to how
the rest of the committee would want," Bullard told reporters on
the sidelines of an economic conference in Prague.
He said he preferred a way of tapering off asset purchases,
then stopping them for a couple of months and keeping the
balance sheet steady before taking further measures.
Risks clouding the economic outlook 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".
GROWTH PROSPECTS IMPROVE
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.
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. []
Bullard said in Prague 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."
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. []
(Additional reporting by Jason Hovet; Editing by Ron Askew)
