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Fed May Have Options If US Defaults: Lockhart

Don't look to the Federal Reserveto offset the damage if the debt ceiling isn't raised by Aug. 2, two regional Fed presidents told CNBC Friday.

The Fed may have options down the road, however, to help the economy after a U.S. debtdefault. (Track the latest debt talk developments in our Live Blog.)

"Failure to raise the debt ceiling would have unpredictable consequences for the U.S. economy," St. Louis Fed President James Bullard said.

If there was a default, "it’s our job to run monetary policy that influences the conditions in the economy. You never say never when it comes to policy options you may have," added Atlanta Fed President Dennis Lockhart in the same interview. "I wouldn't take any policy options off the table to respond to a really bad economy."

But neither think those options include another round of quantitative easing.

"I don’t rule it out, but it’s a very high bar," Lockhart said. "We have a very accommodative [monetary] policy today...Now we need to wait and see."

Despite Friday's weak economic data, both believe the economy is going to be stronger in the second half of the year, with lower inflation.

"This is all confirming what we already knew, which is that the first half has not been as strong as we like. I think we’re in better shape for better growth in the second half of the year," Bullard said. "Policy is about right where it needs to be at the moment."

He noted, however, that with a $14 trillion deficit and a deadline looming on raising the debt ceiling, the Fed "can’t do anything to fix this."

"If the Treasury can’t issue more debt it can’t issue more debt," he said. "We cannot buy debt directly from the Treasury. We can only buy debt in the open market."

If the impasse "led to a generalized crisis, we could come in and provide liquidity to the markets as we did in 2008 and 2009. But the Fed doesn’t have the ability to fix this situation. This is up to the Congress and the president," Bullard said.

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