St. LOUIS Two top Federal Reserve officials on Tuesday made a strong case for further action by the U.S. central bank to spur faster economic growth, but a third, more centrist policymaker disagreed.
The differences illustrate the difficulties Fed Chairman Ben Bernanke faces in forging a consensus behind his view that the Fed should do all it can to heal the country's sickly job market.
John Williams, president of the San Francisco Fed, and Charles Evans, president of the Chicago Fed, both highlighted the stubbornly high unemployment rate in addressing the uncertain path of the economic recovery.
"It is a story that calls for continued action by the Federal Reserve to support a fragile economy," said Williams at a speech in Arizona.
Williams, who leans toward the dovish end of the policy spectrum at the Fed and typically emphasizes the danger of high unemployment over the threat from rising inflation, said he would want to see more data confirming inflation will fall and remain low before taking further action to stimulate growth.
Evans, a persistent advocate for more aggressive Fed inputs to yank down the lofty unemployment rate, said forcefully that the Fed should be taking action now.
"To the extent that we are not making adequate progress ... then I think additional asset purchases could further firm our commitment to accommodative policy," Evans told reporters after a speech in New York.
Buying mortgage-backed securities could help heal depressed housing markets, he added. Williams also signaled his support for such purchases, should the economy continue its moderate growth path without strengthening and inflation continue to fall.
The Fed cut overnight interest rates to near zero almost three years ago and has bought $2.3 trillion in bonds to further spur growth.
It recently said it was likely to hold rates near rock-bottom levels through at least mid-2013 and began adjusting its portfolio to weight it more toward longer-term assets as a way to pull down long-term interest rates.
The pledge to hold rates very low until a specific date is aimed at convincing markets the central bank will not be quick to tighten financial conditions at early signs of improvement in the economy and the labor market.
The Fed took no action at its most recent policy meeting earlier this month. Evans, who was the lone dissenter against the decision to stand pat, had urged the central bank to move.
On Tuesday, he repeated his suggestion of keeping rates low until the unemployment rate, which stood at 9 percent in October, falls to 7 percent, as long as inflation stays below 3 percent. The Fed's implicit target for inflation is 2 percent.
Williams also pushed for a better Fed policy roadmap calling for a detailed outline of the central bank's likely response to a constellation of economic indicators including inflation, the unemployment rate, and the pace of improvement in both the job market and GDP.
In contrast, James Bullard, president of the St. Louis Federal Reserve Bank, said the Fed should hold off from further efforts to lift growth unless the economy faltered.
"We've done a lot of things ... it's not like the committee has been asleep on the job," he told reporters after a speech. "To take further action would require the real economy to deteriorate further."
Though more Fed bond purchases could be a forceful measure to spur growth, it would risk fueling inflation, Bullard said.
Bullard also said he prefers buying Treasury securities, not mortgage-backed securities, so as not to favor a particular sector of the economy.
Bullard is not due to rotate into a voting spot on the Fed's policy-setting panel until 2013, while Evans is a voter this year and Williams will be a voter in 2012.
Bullard questioned whether promises to hold rates near zero for a specific time were credible, given the Fed's reputation for keeping inflation low, and said pegging rate increases to the jobless rate as Evans has advocated could be disastrous.
Dallas Fed President Richard Fisher, speaking in New York, gave voice to the hawkish end of the Fed policy spectrum, reiterating his stance that fiscal policy from lawmakers is needed now rather than more monetary easing.
He also sounded skeptical about the Fed committing to triggers for policy responses.
"Having hard formulas to me is not necessarily the right way to work monetary policy, in part because the gearing has changed through globalization and cyberization," he said after a speech. "We're still very much in a judgmental phase and it will continue that way in terms of assessing when we should tighten, that's going to be the issue."
Williams said both bond buying and communications tools would be effective if the Fed needed to provide new stimulus.
Despite "heartening" third-quarter gross domestic product growth of 2.5 percent, the basic story is still one of "slow recovery from an especially severe financial crisis, he said.
"Additional monetary policy accommodation -- either in the form of additional asset purchases or further forward guidance on our future policy intentions -- may be needed to bring us closer to our mandated objectives of maximum employment and price stability," he said.
(With additional reporting by Ann Saphir in Scottsdale, Arizona, and Dan Bases and Leah Schnurr in New York; Editing by Andrea Ricci)