Fed's Fisher says will not support more easing

DALLAS (Reuters) - The U.S. economy is poised to grow at an "accelerating clip" thanks to the Federal Reserve's super-easy monetary policy, and there is no call for the central bank to do more, a top Fed official said on Wednesday.

"I will not support further monetary accommodation," Dallas Federal Reserve Bank President Richard Fisher told reporters after a speech at the Rotary Club of Dallas. "I do not personally see the benefit of more monetary accommodation even if the economy weakens further. Because again, there's so much liquidity out there, what's the trigger to put it to work?"

Fisher's comments put him at odds with Fed Chairman Ben Bernanke, who on Wednesday said he was prepared to do more if the economy worsens.

The Fed completed its latest round of stimulus last month, and recent dismal economic data has prompted some Fed officials to make the case for more easing if the slow pace of recovery continues to make little dent in the unemployment rate, which last month rose to 9.2 percent.

But having already cut rates to near zero and bought more than $2 trillion in long-term securities, the Fed can do little more for the economy than "tinker at the margins," Fisher said on Wednesday.

For the economy to really gain strength, he said, Congress must resolve the long-term debt and deficit problems and remove uncertainty for U.S. businesses.

Lawmakers and the White House are facing an August 2 deadline for reaching a budget deal to trim the deficit, but so far have been unable to agree on how to do it. On August 2 the government will run out of money to pay its bills unless Congress raises its borrowing limit. Many lawmakers say they will not raise the cap without a budget deal.

In the unlikely event that Congress and the administration do not come to an agreement, the U.S. will still continue to make interest payments on its debt, Fisher said.

As long as Congress does act on the budget, which Fisher said he expects it to do, economic growth should pick up to between 3 and 4 percent this year. The U.S. grew a tepid 1.9 percent pace in the first quarter.

"There is plenty of potential for the economy to move forward at an accelerating clip," Fisher said, noting that many of the headwinds that hurt the economy in the first half, including fallout from the earthquake in Japan, are receding. "This is especially the case now that the Fed has reliquified the economy."

Fisher reiterated his concern that faster growth, coupled with easy monetary policy, could fuel unwanted inflation.

The Fed's preferred measure of inflation, the core personal consumption expenditures price index, rose 1.2 percent in the 12 months through May, the largest increase since August 2009.

Though the level is still well below the Fed's informal 2 percent target for inflation, Fisher said he was watching closely.

"If I see inflation continuing to rise and, most importantly, inflationary expectations beginning to spread, I will be the first out of the box to advocate the removal of the substantial monetary accommodation now in place," he said.

(Reporting by Ann Saphir, Editing by Chizu Nomiyama)