ST. LOUIS (Reuters) - St Louis Federal Reserve President James Bullard said on Friday that emergency liquidity measures by the U.S. central bank to prevent a credit crisis from shuttering financial markets was not causing inflation.
"Discount window lending, which is district by district, that is collateralized lending. So I don't see that as being inflationary," he said in response to an audience question during a panel discussion hosted by Washington University.
"We're trying to keep a close eye on money creation and right now inflation is contained," said Bullard, who is not a voting member of the Fed's interest-rate setting committee this year. The panel discussion was called 'Financial Meltdown: Causes, Consequences and Cures."
The Fed has massively expanded its discount window lending in an effort to unlock credit markets that have frozen up in panic over losses connected with bad bets on U.S. home loans.
The U.S. monetary base has soared and the Fed's balance sheet has doubled in size to $1.7 trillion since September as it stepped forward to prevent American International Group
"I think we've taken the worst case (scenarios) off the table," Bullard said, referring to the danger of cascading failures by financial institutions.
(Reporting by Roger McGrath, writing by Alister Bull, editing by Gary Crosse)
