Fed Official Bullard Sees Revival of Crisis-Era Program

Federal Reserve official says the central bank should revive a crisis-era program to buy government debt if the country seems headed toward a bout with deflation.

St. Louis Fed President James Bullard revived investor worries of U.S. deflation risk Thursday.

James Bullard, president of the Federal Reserve Bank of St. Louis, makes the case in comments to reporters and in a paper released Thursday.

The weak economy poses the risk that the United States could tip into a Japanese-like bout of deflation, he says. That's a widespread and prolonged drop in prices of goods, values of homes and stocks, and in wages.

Bullard, a voting member on the Fed's main policy-setting committee, thinks the deflation risk is low. Buying government debt would energize the economy and nip deflationary forces. Last year, the Fed bought up to $300 billion worth of Treasury securities.

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