UPDATE 2-Lacker dissented against Fed liquidity move

* Fed's Lacker says liquidity plan "fiscal policy"

* Loans to European banks cheaper than those to U.S. banks

* Lacker, seen as inflation hawk, to vote on FOMC in 2012

By David Lawder and Pedro Dacosta

WASHINGTON, Nov 30 (Reuters) - A senior Federal Reserve official said on Wednesday he dissented against the Fed's move to boost dollar liquidity for banks because it amounted to fiscal policy and would effectively loan money to European institutions at cheaper rates than to banks at home.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said the joint action with other major central banks to ease strains from Europe's debt crisis would cut the interest rate for dollar swap lines to below the Fed's own discount rate -- a move he opposed.

The swap lines are intended to ensure banks outside the United States have ready access to dollars, which have become more difficult for banks in Europe to obtain in the market as investor concerns about the euro zone debt crisis have grown.

Lacker, who does not have a regular vote this year on the Fed's policy panel, was called in to vote on the matter in place of Philadelphia Fed President Charles Plosser, who was unable to make the Monday videoconference at which the decision was made.

"I dissented on the vote because I opposed the temporary swap arrangements to support Federal Reserve lending in foreign currencies," Lacker said in an emailed statement.

"Such lending amounts to fiscal policy, which I believe is the responsibility of the U.S. Treasury. The Federal Reserve has provided and can continue to provide sufficient dollar liquidity through purchases of U.S. Treasury securities," he said.

Lacker will rotate into a voting seat on the policy-setting Federal Open Market Committee next year. Both he and Plosser are widely seen as inflation hawks, and have been skeptical of some of the extraordinary measures taken by the U.S. central bank in response to the financial crisis and recession of 2007-2009.

The Fed agreed to lower the rate on its dollar swap lines with the European Central Bank and counterparts in Japan, Canada, Britain and Switzerland by 50 basis points to a rate currently around 0.6 percent -- lower than the 0.75 percent the Fed charges on emergency discount rate loans to U.S. institutions..

Some analysts believe the Fed may have to reduce its discount rate in line as well, particularly if the crisis worsens and starts to impact U.S. institutions.

The Fed said in a statement announcing the action it does not currently see funding strains for U.S. banks, but added that it had tools to provide liquidity domestically if needed.

"We read (this) as saying a cut in the discount rate is not imminent, but would readily be forthcoming if U.S. banks began to face funding difficulties as well," J.P. Morgan analyst Michael Feroli said in a research report.