Volcker: Fed policy needs to be reversed proactively

CAMBRIDGE, Mass. Oct 15 (Reuters) - The enormous amounts of liquidity pumped into the U.S. financial system by the Federal Reserve are not inflationary "at the moment" but will become so at some point, former Fed Chairman Paul Volcker said on Thursday.

Volcker, now an economic adviser to President Barack Obama, said it was difficult, but necessary to start draining liquidity even while unemployment rates remained high.

"You have to act against what seems like current sense. If you wait it's too late," Volcker said while answering questions after a speech on financial markets at Harvard University's Kennedy School of Government. (Reporting by Ros Krasny; Editing by Leslie Adler)