Swiss Bank's cap less tenable as ECB'S quantitative easing approached: Fed's Bullard

CHICAGO (Reuters) - As the European Central Bank prepared to launch a large-scale bond buying program across the European Union, the Swiss National Bank's position on capping its currency against the euro became less tenable, a top Fed official said on Friday.

The Swiss National Bank lifted its cap on the franc against the euro without warning on Thursday, causing a huge shock across global currency markets and leading to massive losses by foreign exchange brokers.

St. Louis Reserve Bank President James Bullard said that ECB's expected bond buying program, known as quantitative easing, forced the Swiss central bank to lift the cap. And while the move was well intentioned for the Swiss economy, Bullard said that it was poorly communicated.

"If I would offer criticism, they didn’t seem to have a data dependent way to communicate to markets about how they would exit," the cap, Bullard said in response to an audience question at a CFA Society event here.

In other responses to questions, Bullard said the U.S. unemployment rate would drop below 5 percent this year. He also said it would be "perfectly fine" for the Fed to drop rates even after raising them if the central bank felt the economy was growing weaker.

(Reporting by Tom Polansekd and Michael Flaherty; Editing by Andrea Ricci)