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Buffett Says Central Banks Have Spent ‘Ammunition’ on Stimulus

March 23 (Bloomberg) -- Berkshire Hathaway Inc. Chairman and Chief Executive Officer Warren Buffett said central banks around the world have used most of their “ammunition” on stimulus measures.

The Federal Reserve is pumping cash into the U.S. financial system by purchasing $600 billion of Treasuries through June to spur jobs and avoid deflation. Policy makers led by Fed Chairman Ben S. Bernanke have held the target rate for overnight loans between banks in a record low range of zero to 0.25 percent since December 2008 to fuel growth.

“Central banks have used most of their ammunition,” Buffett said today in a meeting with employees at the Taegutec India Pvt.’s factory in Bangalore, which was broadcast on CNBC-TV18. “They’ve got interest rates to practically nothing and we’ve had a very similar fiscal policy in the United States.”

A recovery in global growth and demand has prompted European Central Bank President Jean-Claude Trichet to signal a rate increase as soon as April, while Fed Bank of Dallas President Richard Fisher said this week no additional monetary stimulus will be necessary after the asset purchase program is completed in June. The World Bank this week said East Asia needs to tighten monetary policy to keep price expectations from escalating and governments should let discretionary fiscal stimulus packages lapse.

“We don’t call it stimulus, but when you are spending 10 percent more of your GDP than you are taking in as a government; that is a huge stimulus,” Buffett said.

Succession Plan

Buffett said separately in an interview with CNBC-TV18 the company has a clear succession plan.

The billionaire said at a news conference in Bangalore yesterday that directors would support Ajit Jain as the company’s next head if the reinsurance executive decided to seek the post.

“He loves what he does, he’s not looking to take my job,” Buffett said in response to a question about whether Jain, 59, would succeed him. “If he was, the board of directors would probably put him in there in a minute.”

Buffett, 80, is preparing Omaha, Nebraska-based Berkshire for his eventual departure. The company said in February it has four candidates to succeed Buffett as CEO, without publicly identifying them. In his annual letter on Feb. 26, Buffett praised Berkshire managers including Jain, energy executives David Sokol and Greg Abel, railroad CEO Matt Rose, and Geico car insurer CEO Tony Nicely.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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