According to a U.S. Central bank official, the global economy recovery is likely to remain on the track despite unsettled financial markets. However, Federal Reserve Bank of St. Louis President James Bullard warned US of see continued forward momentum through this year and next year. 

James Bullard believed that the recovery will withstand the trouble which is currently spreading across financial markets. Governments have made it clear to prevent major financial institutions from failing outright. According to him, the less contagion effects probably occur because of proper too-big-to-fail guarantees.

His comments were from a press release and materials associated with his speech before the Swedbank Economic Outlook Seminar, in Stockholm, Sweden. Such comments did not offer much in the way of hints.

Much of what was said by Bullard was in Stockholm. European financial troubles might pose threat which should be downplayed by the central banker’s effort. He says that the similar current difficulties are not likely to turn the global economy into recession and shows his belief that the prospect for the U.S. economy is much as it’s been for some time.

James Bullard’s comment did not focus on the outlook for interest rates but a caution about the size of the balance sheet of the Federal Reserve. The sheet has had rapid growth because the central bank bought mortgage assets to reduce borrowing costs and offered support to financial markets. He said that theoretically there would be a proper work of any credible commitment to remove the policy in a finite time, emphasizing that in reality, financial markets might lose faith earlier than that.

Congress is making efforts to reform the financial system. However, the official gave a caution that such efforts won’t eliminate all future problems. The problems are not likely to be resolved by using better regulations and higher capital levels.