Fed's Fisher sees "faint" U.S. recovery starting

CARLSBAD, California (Reuters) - Prospects for the U.S. economy are picking up, but there are questions about how sustainable the rebound will be, Dallas Federal Reserve Bank President Richard Fisher said on Thursday.

"The outlook for real activity over the next several quarters is improving," Fisher said at a fixed income forum in Carlsbad, California.

"We are seeing changes from negative impulses to slightly positive ones. This accentuates the positive in the aggregate. We probably have the beginnings of a faint recovery."

Like Fed Chairman Ben Bernanke this week, Fisher cited "considerable angst" about still-rising U.S. unemployment, and said consumption would make only a "slow crawl out of purgatory" -- not enough to power a recovery.

Fisher is not a voting member of the Fed's monetary policy-setting Federal Open Market Committee in 2009.

The policy-maker said the Fed -- the U.S. central bank -- needs to avoid giving the impression its policy moves are influenced by political considerations, and provide necessary monetary stimulus while maintaining a "credible commitment" to keeping down inflation.

"We know full well that monetary policy trickles in with a lag and that we will have to 'pull the trigger' of tightening policy well before it is politically convenient," he said.

Already, the Fed's aggressive policy moves risked doing "lasting damage" to its reputation as an inflation fighter, the policy-maker said.

"I believe we have come as close as we dare to the line between acceptable and unacceptable risk in this regard, and do not personally wish for us to expand or extend our purchases of Treasuries beyond the cumulative $300 billion planned by this fall," Fisher said.

Just as the Fed has outlined an "exit strategy" from its monetary stimulus efforts, there must be a similar commitment to stabilizing and ultimately reducing budget deficits, Fisher said.

Fisher also said he was concerned that the concentration of financial assets into a few large firms would only increase following "crisis-related acquisitions" and massive government bailout funds provided to large banks.

This could lead to "reduced competition and a less diverse and efficient financial sector," Fisher warned.

(Editing by James Dalgleish)