Hightlights: Dallas Fed's Fisher talks with Reuters

DALLAS (Reuters) - Richard Fisher, president of the Dallas Federal Reserve Bank, told Reuters in an interview on Wednesday the Fed's decision to buy more Treasuries is not necessarily a signal of more to come.

Below are some excerpts from the conversation:

Can the Fed do more to stimulate the economy?

"We have done a lot. The real issue in my opinion now is, are we pushing on a string with accommodation, and how do you expect the gasoline we put in the engine, which now is in $1 trillion in excess bank reserves, and more than that sitting on corporate balance sheets. So how do you get it from the gas tank, which is completely flush, into the transmission mechanism, which is the engine of the economy. The cost of money is not an issue. Access to capital is not an issue. So it's got to be something else."

So what is missing?

"I listen carefully to the people I talk to, and what they attribute it to. They're confused, about what's coming down the pike in taxes, what's coming down the pike in regulation, and other things, influence their ability to hire people. Until there's greater clarity, I don't see a pick up in demand because I don't see people being out in the labor force. Under these conditions, the recovery is anemic, it's sort of listless. We could see 2 percent growth in the second half but, it's not what we want. It's not robust enough to create a lot of jobs."

Does the Fed's policy of using maturing mortgage bonds to buy Treasuries amount to an 'easing bias'?"

"Not necessarily. I think it was to avoid passive tightening. The economy is not strong. It's in positive territory, and it was the consensus of the group … decided that was the best strategy. No matter what the language is, the fact is rates are going to stay low for a while. That's a given in my book. And no matter how we phrase it, there is not going to be tightening until we see the whites in the eyes of the recovery. People want to be certain that we're in a recovery mode before policy gets tightened."

So is the Fed powerless to do more?

"The chairman laid it out pretty well in Jackson Hole. If we had a liquidity crisis, which isn't the issue, or we had some kind of financial crisis, we've shown we could step up to the plate. We are the lender of last resort. But that's not the issue right now, that's not the circumstance we're under."

Is there a risk that further Treasury purchases would create the perception that the Fed is monetizing the debt?

"I sense that when this first came up, which is when we first started buying Treasuries ... that was certainly on everyone's mind. None of us want to be viewed as monetizing deficits. That's sort of the tripwire for the central bank losing its independence. I don't feel like we have an instinct as a group to do that."

How will we know the recovery has taken hold?

"You'll begin to sense it in terms of commitment to capex (capital spending), and hiring plans and you'll see it in the budgeting of firms and so on with their planning processes. I think you'll be able to see signs."

What more can be done?

"The issue really is job creation. That's part of our mandate. What do we do to assist the process of job creation for Americans. Well, I think we've done a lot. Am I happy with the way it is? No, I'm not. I'm not happy with the situation in terms of employment in this country. I grew up in a household where my father lost his job, often. Things were horrible. I know how painful it can be.

"The question is how much can the Fed do, and how much can the rest of the guys do. I think the Fed's done a lot. And I think it's time for the rest of the guys to get their act together.

(Reporting by Pedro DaCosta and Ann Saphir)