Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank could purchase more Treasurys or alter its balance sheet if the U.S. economy were to slow further.
“If additional actions are required, I can assure you the Federal Reserve is not out of bullets,” Lockhart said Monday in a speech in Florence, Ala. “Expansion of the balance sheet or changes in the composition of the Fed’s asset portfolio are available, in my view. These could be quite effective, particularly if done in sufficient size, in the event that the economy retreats back into contractionary territory.”
Lockhart told reporters after his speech that he supported the decision by U.S. central bankers last week to specify a date for the first time for their commitment to low borrowing costs, saying the benchmark rate will stay in a range of zero to 0.25 percent at least through mid-2013.
Fed policymakers had previously pledged to keep rates low for an “extended period.”
“I viewed being explicit about what extended period means now, under current circumstances, as a well-calibrated policy that reflects the current conditions and a measured response to the outlook,” he told reporters.
