UPDATE 3-Fed's Plosser wants to slow bond buys

Thu May 9, 2013 9:43am EDT

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(Adds Plosser concerns on central bank pressures, byline)

By Luciana Lopez

NEW YORK May 9 (Reuters) - The U.S. Federal Reserve should slow its massive asset purchase program, a senior Fed official said on Thursday, saying he wasn't sure how much the U.S. central bank's easy monetary policy was helping the struggling labor market.

"I'd like to stop but I would particularly like to see us begin to slow the pace down, gradually ease our way out of this if we possibly can," Philadelphia Fed President Charles Plosser said on Bloomberg television, answering a question about an exit from the Fed's monetary easing.

The Fed is buying $85 billion each month in Treasuries and mortgage-backed securities in a bid to bring unemployment closer to 6.5 percent from its current 7.5 percent.

But that easing has come under fire recently from analysts and investors who say that the bond buying distorts the market and masks the build-up of sovereign debt.

"I've never felt that our asset purchases have been that effective in addressing what's the biggest problem we face in this country, which is the employment market and the labor market," Plosser said.

The transmission of that easing to the jobs market is "dubious," added Plosser, a longtime skeptic of the Fed's extraordinary easy monetary policies.

Investors have begun speculating as to when the Fed could slow or stop its asset purchases.

But economic data have been mixed, with disappointing figures sprinkled in among better-than-expected figures. That has clouded the outlook for when the Fed could exit its extraordinary measures.

Plosser also called out fiscal policymakers for not doing their part to buoy the economy.

"Our fiscal authorities are not doing a very good job in any country," he said, saying he found it "disturbing" that central banks were expected to take on so much of the weight of guiding economies.

"It's easier to print money than to raise taxes or cut spending, and when that happens we know that that usually ends in a not very pretty place," he said. (Reporting by Luciana Lopez; Editing by Chizu Nomiyama)

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