HOUSTON (Reuters) - A leading Federal Reserve easy money skeptic on Thursday vowed not to back any further Treasury bond buying when the current $600 billion program is complete and said there is evidence price pressures are building.
Dallas Fed President Richard Fisher said he would have voted against the easing effort had he been a voting member when the program was launched in November 2010.
“I cannot foresee any circumstance at present that would lead me to support any further expansion of our initiative on that front,” said Fisher, who is a voter on the Fed’s policy-setting panel this year.
Fed officials debated whether or not to reduce the pace or the overall size of the easing program as a result of the improving economy at their January meeting. However, some officials doubted the outlook would improve sufficiently to warrant any adjustments.
The minutes did not reflect any discussion of further easing beyond the current controversial program.
Another Fed official who has persistently criticized the U.S. central bank’s aggressive support for the weak economy, Kansas City Fed President Thomas Hoenig, said he believes the recovery is now self-sustaining.
“We’ve been in recovery now for over a year-and-a-half and I think we need to keep that in mind as we look ahead,” he said in an interview with Fox Business Network. Hoenig is not a voter this year.
Fisher pointed to the possibility that low inflation may have hit bottom, saying recent data point to signs of incipient upward pressure on prices.
“As far as price stability ... we do have some pressures that are building,” he said.
U.S. core consumer prices rose at the quickest pace in 15 months while underlying producer prices rose at the fastest rate in more than two years in January, reports have shown over the last two days.
The U.S. central bank at its January meeting said that despite an accelerating pace, the recovery was still too weak to forcefully lower a high jobless rate.
Against that backdrop, it elected to stay on track with the bond buying, which is due to be done by mid-year. Fisher voted in favor of the move.
Illustrating differing views of the outlook at the Fed, Chicago’s Charles Evans, another Fed voter, said in a speech that the pace of recovery remains disappointing, with unemployment too high and inflation too low for the Fed to rest from its stimulus efforts.
However, Evans said the current easing program may be sufficient.
“It will not surprise me if at the time we get to June and we are looking at the economy, that things are sufficiently better that that might be enough.”
Reporting by Chris Baltimore, writing by Mark Felsenthal; Editing by Gary Crosse